South Korea’s consumer prices rose at the fastest clip in nearly 24 years in June, mainly due to soaring energy costs, government data revealed on Tuesday.
Consumer prices soared 6 per cent last month from a year earlier, accelerating from a 5.4 per cent on-year spike in May, according to the data from Statistics Korea.
It marked the sharpest inflation rate since a 6.8 per cent jump in November 1998, when South Korea was in the midst of the 1997-98 Asian financial crisis, reports Yonhap News Agency.
Consumer prices rose above 2 per cent for the 15th straight month in June.
South Korea faces growing inflationary pressure, as crude oil and other commodity prices rose due to the protracted war between Russia and Ukraine, and global supply disruptions. Demand-pull inflation has also increased amid the economic recovery.
The statistics agency said inflation is expected to stay in the 6 per cent range for the time being and a possibility of 7 per cent cannot be excluded at one point.
Mounting inflationary pressure lent support to the prospect that the Bank of Korea (BOK) will further hike the policy rate this month.
Last week, a BOK official told Yonhap News Agency that the possibility of a big-step rate hike will increase should consumer prices grow 6 per cent or higher.
The BOK has hiked the key interest rate five times — all by a quarter percentage point at a time — since August last year to 1.75 per cent.
The June inflation was mostly driven by rising prices of petroleum products and personal services.
Core inflation, which excludes volatile food and oil prices, climbed 3.9 per cent on-year last month, the sharpest gain since February 2009.
In June, prices of daily necessities, such as food, clothing and housing, spiked 7.4 per cent on-year, the highest growth since November 1998.
In June, the Finance Ministry had sharply raised its 2022 inflation outlook to a 14-year high of 4.7 per cent, while lowering its economic growth estimate to 2.6 per cent.
The BOK put its 2022 growth forecast at 2.7 per cent and expected consumer prices to rise 4.5 per cent this year.