Inflation expected to drop on price stabilization measures, eased Iran tensions

Inflation is expected to ease in July from the previous month, supported by the government's efforts to stabilize consumer prices and lower crude oil prices following eased tensions over the Iran war, the Bank of Korea said Thursday.

"Consumer prices in June expanded further from May as petroleum product prices remained elevated and the increase in agricultural product prices accelerated," Deputy Gov. Lee Ji-ho said during a meeting to review inflation trends.

"Inflation is projected to remain elevated for the time being as downward pressure from lower crude oil prices will be offset by demand-side pressure stemming from economic growth," he said.

Earlier in the day, government data showed that Korea's consumer prices rose 3.2 percent in June from a year earlier, marking the steepest growth since December 2023, when the figure was at the same level. In May, consumer prices rose 3.1 percent.

Fuel prices surged 24.7 percent last month, contributing 0.93 percentage points of the overall increase in consumer prices. It was the sharpest growth since the 35.2 percent posted in July 2022.

Prices of agricultural and fishery products went up 3.2 percent.

Yonhap