South Korea's April inflation hit a nearly two-year high, increasing the likelihood of a rate hike by the central bank.

According to Odaily, South Korea's April CPI rose to its highest level in nearly two years, driven by a surge in oil prices due to the conflict in the Middle East. This has raised the possibility that the central bank may raise interest rates in the second half of this year to curb inflationary pressures. "Although oil prices remain high, the government's nationwide fuel price cap measures have limited the rise in gasoline prices, thereby easing inflationary pressures," said Chun Kyu-yeon, an economist at Hana Securities. "However, due to factors such as rising airfare, the likelihood of further increases in service price inflation is growing, so the upward trend in prices will continue for some time." Kong Dong-rak, an economist at Daishin Securities, stated: "The recent remarks by the Bank of Korea's Deputy Governor seem to have taken a step closer to focusing on inflation. The central bank may signal a policy shift this month and raise interest rates at its July meeting." The Bank of Korea has kept its benchmark interest rate unchanged since May 2025, and its next meeting is scheduled for May 28. (Jinshi)