South Korea’s March inflation hits decade high on supply woes
SEOUL (Reuters) – South Korea’s consumer prices rose at their fastest pace in more than a decade in March, fueled by rising energy and raw material costs due to the crisis Ukraine and additional pressure on the central bank ahead of its rate decision meeting next week.
The consumer price index (CPI) for March rose 4.1% from a year earlier, Statistics Korea data showed on Tuesday, the fastest increase since December 2011 and surpassing a rise 3.8% announced in a Reuters poll.
Core inflation, which excludes volatile food and energy costs, also jumped 2.9% from a year earlier, remaining at the pace seen in February, a sign that soaring oil prices fuel and raw materials has affected the cost of goods and services.
The breakdown of the data showed that the cost of oil jumped 31.2%, while that of accommodation rentals and outdoor dining rose 2.0% and 6.6%, respectively, year on year. . The cost of electricity, gas and water added 2.9%.
This puts the Bank of Korea (BOK) monetary policy board under pressure to raise the base rate further. It has raised rates by a total of 75 basis points since the pandemic.
On Monday, BOK Deputy Senior Governor Lee Seung-heon said this month’s policy review would be difficult, due to the twin risks of higher inflation and pressure to decline in growth.
BOK board members are meeting on April 14. The bank’s current base rate, KROCRT=ECI, stands at 1.25%, after policymakers stood their ground at the last meeting in February following back-to-back hikes.
Last week, BOK gubernatorial candidate Rhee Chang-yong told reporters that he expected inflation in the first half of 2022 to beat the bank’s 3.1% forecast.
Separately on Tuesday, the government announced it would extend tax cuts on petroleum products by 30%, down from the current 20%, for three months to minimize the impact of soaring energy prices due to the conflict. Russian-Ukrainian.