South Korean inflation hits decade high, boosting rate hike views

[SEOUL] South Korea's consumer inflation accelerated to a decade high in November, remaining above the central bank's 2 per cent target for an eighth straight month and boosting the case for another interest rate hike next month.

November consumer prices jumped 3.7 per cent from a year earlier, government data showed on Thursday, hitting the fastest growth since December 2011 and up from 3.2 per cent rise in October.

That beat a 3.1 per cent increase tipped by analysts in a Reuters survey.

Stronger inflationary pressure is fanning views the Bank of Korea could raise interest rates at its next policy meeting on Jan 14, as the upward tick of prices proves to be more than transitory.

Last week, the BOK raised interest rates for the second time since the pandemic began and revised up its inflation outlook to 2.0 per cent for next year, leaving the door open for further policy tightening.

Thursday's headline inflation reading was lifted by a 35.5 per cent surge in petroleum prices from a year earlier, and a 15 per cent spike in livestock prices.

November core CPI, which excludes food and fuel, rose 1.9 per cent from a year earlier after a 2.4 per cent rise in October.

Month-on-month inflation rose 0.4 per cent, handily beating a 0.2 per cent decline tipped in the survey.

REUTERS