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 percent last month from a year earlier, accelerating from a 5.4 percent on-year spike in May, according to the data from Statistics Korea.
It marked the sharpest inflation rate since a 6.8 percent 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 percent 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 percent range for the time being and a possibility of 7 percent cannot be excluded at one point.
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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 percent 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 percent.
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 percent 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 percent on the year, the highest growth since November 1998.
In June, the Finance Ministry sharply raised its 2022 inflation outlook to a 14-year high of 4.7 percent, while lowering its economic growth estimate to 2.6 percent.
The BOK put its 2022 growth forecast at 2.7 percent and expected consumer prices to rise 4.5 percent this year.
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