South Korea's April inflation hits near two-year high, increasing likelihood of central bank rate hike

Odaily Planet Daily News Driven by soaring oil prices due to conflicts in the Middle East, South Korea's April CPI growth rate reached its highest level in nearly two years, which increases the possibility of the central bank raising interest rates in the second half of this year to curb inflationary pressures. "Although oil prices remain high, the South Korean 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 Hanwha Securities. "However, due to factors such as rising airfare prices, the likelihood of service price inflation moving higher is increasing. Therefore, the upward trend in prices will likely persist for some time." Kong Dong-rak, an economist at Daishin Securities, stated: "Recent comments by the Bank of Korea's deputy governor seem to indicate a further shift towards focusing on inflation. The central bank may signal a policy pivot this month and raise rates at the July meeting." The Bank of Korea has maintained its benchmark interest rate unchanged since May 2025, with its next policy meeting scheduled for May 28. (Jin Shi)