Bank of Korea: "The increase in inflation rate is due to the base effect… Closely monitoring consumer price trends"

The Bank of Korea explained that last month's inflation rate, which was recorded at 2.2%, was "amplified due to the impact of the base effect." It also stated that future price trends could be affected by U.S. tariff policies, the political situation in the Middle East, and summer weather conditions.

Kim Woong, Deputy Governor of the Bank of Korea, diagnosed the situation at the 'Price Situation Review Meeting' held on the morning of the 2nd at the main building of the Bank of Korea on Namdaemun-ro in Seoul. According to Statistics Korea's announcement on that day, the consumer price inflation rate for June was 2.2%, up from 1.9% in May.

The Bank of Korea explained that the increase in consumer prices was 0.27% points, of which petroleum products and agricultural, livestock, and fisheries products contributed 0.10% points and 0.11% points, respectively. Other prices, such as core inflation and processed foods, contributed 0.03% points to the increase.

Deputy Governor Kim explained, "The rise in the consumer price inflation rate was temporarily amplified due to last year's base effect on the prices of agricultural, livestock, fisheries products, and petroleum products." The temporary surge in oil prices around mid-June also had an impact.

On future price trends, Deputy Governor Kim said, "If the current stability in international oil prices and exchange rates continues this month, it is expected that the increase in consumer prices will narrow," and "it is forecast to fluctuate around 2% going forward." He cited the high uncertainty stemming from variables such as U.S. tariff policies, the Middle East situation, and summer weather conditions.

Deputy Governor Kim also said, "Given the high consumer prices, we will continue to closely monitor the price situation." The living cost index rose by 2.5% last month, up 0.2% points from 2.3% in May.

Jin-Kyu Kang, Reporter josep@hankyung.com