The inflation in South Korea accelerated in May.

In May, overall inflation in South Korea accelerated to a 26-month high, providing the country's central bank with stronger reasons to tighten policies in the coming months. This increase in inflation reflects the growing impact of rising oil prices and the weakening of the South Korean won against the US dollar amid tensions in the Middle East, both of which continue to raise import costs. South Korea's statistics agency announced on Tuesday that the consumer price index rose by 3.1% year-on-year in May, the fastest pace since March 2024, compared to a 2.6% increase in April. This latest data exceeded the median estimate of a 3.0% increase given by nine economists surveyed by The Wall Street Journal. On a month-on-month basis, consumer prices in May rose by 0.5%, surpassing the expected 0.3% increase from the survey. The core CPI, which excludes volatile food and energy prices, rose by 2.5% year-on-year and 0.5% month-on-month in May. The Bank of Korea, in its first policy meeting under new governor Shin Hyun-Song last week, kept interest rates unchanged but hinted at a more hawkish stance due to upward risks in both growth and inflation.