SEOUL — South Korea’s consumer inflation accelerated in June to its fastest pace since January this year, government data showed on Wednesday, beating market expectations.
The consumer price index rose 2.2 percent in June from a year earlier, after rising 1.9 percent in May, according to Statistics Korea.
In June, the Bank of Korea lowered interest rates by 25 basis points to 2.50 percent in a unanimous decision.
Board members of South Korea’s central bank said it was necessary to continue easing monetary policy to support economic growth, but with caution over associated risks, minutes of their May 29 policy meeting showed.
One member “emphasised the importance of assessing the risks associated with further rate cuts and calibrating the pace accordingly,” citing instability in housing prices.
Another member concurred, saying “a well-calibrated policy mix is needed, combining continued monetary easing with focused fiscal and financial measures aimed at supporting the vulnerable sectors”.
Members noted that changes in US tariff policies and monetary policy adjustments, as well as domestic economic policies under a new administration should be considered when determining the extent of any further rate cuts.
South Korea’s economy unexpectedly contracted in the first quarter as exports and consumption stalled amid fears over the impact of Washington’s aggressive tariffs, fanning expectations of more interest rate cuts.
Gross domestic product (GDP) contracted 0.2 percent from a quarter earlier on a seasonally adjusted basis, shrinking for the first time since the second quarter of 2024 and missing forecasts for a gain of 0.1 percent in a Reuters survey.
