SEOUL :South Korea’s consumer inflation weakened to an 11-month low in June as supply-side pressures eased, official data showed on Tuesday, coming in below market expectations and providing some relief for policymakers.
The consumer price index (CPI) rose 2.4 per cent higher in June from a year earlier, slower than the 2.7 per cent rise in May and the weakest since July 2023, according to Statistics Korea.
It was also well below the median 2.7 per cent rise tipped in a Reuters survey of economists.
Consumer inflation is expected to stabilise to the lower-to-mid 2 per cent level in the second half, the country’s vice finance minister said, vowing continued policy measures to keep prices under control.
The Bank of Korea (BOK) said in its assessment it sees the fact that inflation has come down to the mid-2 per cent level as a positive and that it will watch to see if inflation converges with its 2 per cent target.
The index fell 0.2 per cent on a monthly basis, after a 0.1 per cent rise in the previous month, marking the first decline in seven months.
By product, prices of agricultural goods fell 5.3 per cent over the month while petroleum goods lost 2.9 per cent, dragging the index lower.
BOK governor Rhee Chang-yong said last month the pace of consumer inflation is likely to continue to slow, feeding expectations the central bank will start cutting interest rates towards the end of this year.
The BOK extended its interest rate pause for an 11th straight meeting in May. The bank next meets on July 11.
The core CPI, excluding volatile food and energy items, was 2.2 per cent higher in June than a year before, in line with May.
