Bank of Korea: “Inflation to Stay in 3% Range for Now... Closely Monitoring Situation”

Inflation Review Meeting

Bank of Korea: "Oil Price Shock Spreading to Other Sectors"

With the consumer price inflation rate for May exceeding 3.1% due to the oil price shock, the Bank of Korea expects inflation to remain in the 3% range for the time being, as the impact of rising oil prices gradually spreads to other sectors.

At 8:30 a.m. on June 2, the Bank of Korea held a meeting at its main office in Jung-gu, Seoul, chaired by Director Lee Jiho of the Economic Statistics Department, to review the current inflation situation and discuss future price trends.

In May, the consumer price index rose by 3.1%, up 0.5 percentage points compared to the previous month’s increase of 2.6%. The rate of petroleum product price increases expanded to 24.2%, compared to 21.9% last month.

Prices of agricultural, livestock, and fishery products also increased by 2.2% year-on-year, returning to an upward trend. While agricultural product prices remained stable, prices of livestock and fishery products each rose by more than 5%.

Core inflation stood at 2.5%, up from 2.2% in April, mainly due to rising service prices such as domestic and international airfare and passenger car rental fees.

Director Lee stated, “Consumer price inflation in May saw a significant increase compared to the previous month, as the rise in petroleum product prices accelerated and service prices, particularly in travel-related sectors such as domestic and international airfares, also climbed. The cost of living index also rose to the mid-3% range, increasing the burden of living expenses for vulnerable groups, who spend a larger proportion of their income on essential goods.” He added, “The inflation rate for June is also expected to remain at a similar level to the previous month, as the rate of increase in petroleum product prices continues to stay high.”

Director Lee further commented, “There is considerable uncertainty in future inflation trends, mainly due to the evolving situation in the Middle East and the resulting volatility in oil prices. However, as the oil price shock gradually spreads to other sectors, we expect the inflation rate to remain in the 3% range for the time being. We will closely monitor the situation with a heightened sense of caution.”

This content was produced with the assistance of AI translation services.