S.Korea June consumer inflation hits near 24-yr high, exceeds expectations

A woman wearing a protective mask is seen at a fish market amid the coronavirus disease (COVID-19) outbreak continues in Seoul, South Korea April 5, 2020 REUTERS/Kim Hong-Ji

SEOUL, July 5 (Reuters) – South Korea’s consumer prices rose more than expected in June to hit the fastest pace in nearly 24 years, government data showed on Tuesday.

The consumer price index (CPI) rose 6.0% in June from a year before, speeding up from a 5.4% rise in the previous month and exceeding the 5.9% tipped in a Reuters poll.

It was the fastest annual rise since November 1998 and was above the central bank’s 2% target for a 15th consecutive month.

The index rose 0.6% on a monthly basis, also exceeding a 0.5% rise seen in the survey.

The Bank of Korea last month said it expected the inflation trajectory to be higher than earlier projections and that it would closely assess debt repayment burdens to determine whether a half-percentage point interest rate hike in July would be appropriate. read more

The BOK has delivered five 25-basis-point interest rate hikes since last August to 1.75%, the highest since mid-2019, joining a global wave of policy tightening as central banks grapple with price spikes not seen in decades. read more

A half-percentage-point interest rate increase, if delivered in July, will be the first-time in the central bank’s history.

The core CPI, which excludes volatile food and energy prices, rose 3.9% from a year ago, the fastest pace since February 2009.

Reporting by Jihoon Lee; Editing by Kim Coghill and Lincoln Feast.

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