South Korea’s headline inflation showed a faster-than-expected increase in August, breaking the trend of six consecutive months of cooling.
According to the country’s statistics office, the benchmark consumer-price index rose 3.4% compared to the previous year, surpassing July’s 2.3% increase which kept inflation at a 25-month low.
This figure exceeded the market forecast of 2.8% for August and went above the central bank’s annual target of 2.0%.
The rise in inflation was primarily driven by higher prices in services, utilities, industrial goods, and agricultural products, as reported by the statistics office.
On a monthly basis, the index recorded a 1.0% gain in August, following a slight 0.1% increase in July.
The core consumer-price index, which excludes volatile food and energy prices, experienced a 3.3% year-on-year increase and a 0.3% monthly increase in August, compared to July’s gains of 3.3% and 0.2%, respectively.
Some analysts believe that while there are temporary risks on the upside, inflation in South Korea is expected to trend downwards after reaching a multi-decade high of 5.1% in 2022.
The central bank predicts an average inflation rate of 3.5% in 2023 and 2.4% in 2024.