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South Korea's consumer inflation eased for a fourth consecutive month in May to the lowest in 19 months but core inflation remained elevated, clouding views on whether the central bank may start to cut interest rates soon to boost economic growth.
The consumer price index (CPI) rose 3.3% in May year-on-year, Statistics Korea data showed on Friday, in line with the forecast in a Reuters analysts survey and slowing from a 3.7% rise in the previous month.
It was the slowest rise since October 2021, having peaked at a near 24-year high of 6.3% in July 2022.
On a monthly basis, CPI rose 0.3% in May, after a 0.2% increase in April, extending its run of gains to a sixth consecutive month.
The finance ministry said after the data release that inflation would continue to stabilise.
However, the central bank said the inflation outlook was highly uncertain, citing risks from global oil prices, economic growth and public utility price increases.
By product, agricultural prices rose 0.5% in May month-on-month, while utility prices jumped 2.2%. Petroleum products dropped 1.4%, however, dragging the annual rate lower.
"Core inflation is starting to soften, but it is still at high levels and will not cause any meaningful change in the central bank's policy stance that is trying to keep interest rates at restrictive levels," said Ahn Jae-kyun, fixed income analyst at Shinhan Securities.
The Bank of Korea last week flagged it may not be done tightening, after it held
interest rates
steady for a third straight meeting and trimmed this year's economic growth forecast.
Core CPI, which excludes volatile food and energy prices, rose 3.9% in May on-year, the slowest increase in 10 months.
But it was the second straight month that the core rate stayed above the headline rate, following its 4.0% rise in the previous month. (Reporting by Jihoon Lee, additional reporting by Youn Ah Moon; Editing by Shri Navaratnam,Sam Holmes and Kim Coghill)