SEOUL (Reuters) – South Korea’s consumer price inflation fell to the lowest in 11 months in June as supply-side pressures eased, official data showed on Thursday, below market expectations and providing some relief to policymakers.
The consumer price index (CPI) rose 2.4% in June from a year earlier, slowing from a 2.7% increase in May and hitting the lowest level since July 2023, according to Statistics Korea.
It was also well below the median forecast of a 2.7 percent increase in a Reuters survey of economists.
The country’s deputy finance minister predicted that consumer price inflation would stabilize at the low to mid-2% range in the second half of the year, and vowed to continue policy measures to curb prices.
The Bank of Korea (BOK) said it was positive that inflation had fallen to the mid-2% range and that it would closely monitor whether inflation would converge to its 2% target.
The index fell 0.2% on a monthly basis after rising 0.1% in the previous month, its first decline in seven months.
By commodity, prices of agricultural products fell 5.3% from the previous month, while petroleum products also fell 2.9%, dragging down the index.
Bank of Korea Governor Lee Chang-yong said last month that consumer price inflation is likely to continue to slow, raising expectations that the central bank will start cutting interest rates towards the end of the year.
The Bank of Korea extended its interest rate hold for the 11th consecutive time at its May meeting. Its next meeting is on July 11.
Core CPI, which excludes volatile food and energy items, rose 2.2% year-on-year in June, remaining at the same level as May.