SEOUL :South Korea’s consumer inflation accelerated for a third month in October amid higher food costs, keeping policymakers on edge as they are monitoring whether current interest rates are tight enough to bring inflation to heel.
The consumer price index stood 3.8 per cent higher in October from a year ago, marking the fastest gain since March 2023 and beating a 3.6 per cent gain seen in a Reuters poll.
On a monthly basis, the index rose 0.3 per cent, also beating a median 0.15 per cent forecast.
The stickiness of inflation argues for the higher-for-longer interest rates scenario for the Bank of Korea, who kept rates unchanged on Oct. 19 and warned of inflationary risks from the Israel-Hamas conflict and global oil prices.
By categories, prices of fruits surged 24.6 per cent in October from a year ago, coffee prices jumped 11.9 per cent. An index of energy prices combining petroleum and electricity prices gained 2.8 per cent from a year earlier.
“Slowing of inflation is expected to be more gradual than initially expected due to geopolitical risks in the Middle East and abnormally low temperatures,” Finance Minister Choo Kyung-ho said in a policy meeting on Thursday.
Most analysts expect the BOK to hold rates through the first quarter of next year and cut them by 25 basis points to 3.25 per cent in the second quarter of 2024.