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

Odaily Planet Daily News: A surge in oil prices triggered by the conflict in the Middle East has driven South Korea’s April CPI growth to the highest level in nearly two years, increasing the likelihood that the central bank will raise interest rates in the second half of this year to curb inflationary pressure. “Although oil prices are still staying high, the nationwide fuel price cap measures implemented by the South Korean government have limited the rise in gasoline prices, thereby easing inflationary pressure,” said Chun Kyu-yeon, an economist at Hana Securities. “However, due to factors such as rising air ticket prices, the likelihood that service-price inflation will move even higher is increasing, so the upward trend in prices will remain in place for some time.” Kong Dong-rak, an economist at Daishin Securities, said: “The remarks recently made by the deputy governor of the Bank of Korea appear to be moving toward placing even more focus on inflation. The Bank of Korea may release a policy-turnaround signal this month and raise interest rates at the July meeting.” The Bank of Korea has kept interest rates unchanged since May 2025, and its next meeting is scheduled for May 28. (Jin10)