Korea Inflation Hits Highest Since 2012 As Economy Recovers

(Bloomberg) -- South Korea’s inflation rose to its highest since 2012 in May as the economy’s rebound gathered pace and as last year’s drop in prices offered support.

Inflation from a year earlier reached 2.6% from April’s 2.3%, data from the statistics office showed Wednesday. Economists had also expected consumer prices to rise 2.6%.

Inflation is rising globally as surging commodity costs feed into higher consumer prices and trigger debates about when central banks might start to raise interest rates again. For the Bank of Korea, faster price gains also reflect a broadening economic recovery that adds pressure on the bank to normalize monetary policy.

The reading marks the second straight month the headline inflation exceeded the central bank’s 2% target. The rise was partly buoyed by the negative reading in May 2020.

Key Insights

Get More

• Compared with the previous month, consumer prices rose 0.1% in May.
• South Korea’s core inflation came in at 1.5%, versus the prior year.
• Transportation costs were among the biggest drivers of gains, rising 9.2% from a year earlier. Prices for foods and non-alcoholic beverages jumped 7.4%. Restaurants and hotels saw prices rising 2%. Communications costs fell 2.1%.

©2021 Bloomberg L.P.