Overview
- Bank of Korea officials, who spoke after Wednesday’s data showed a 2.6% year-on-year CPI gain for April, said inflation could climb again in May due to high oil prices and base effects from last year’s food declines.
- South Korea’s government on Thursday froze fuel price caps for another two weeks to hold down living costs, keeping refinery supply prices capped at 1,934 won for gasoline, 1,923 won for diesel, and 1,530 won for kerosene per liter.
- April’s jump was led by petroleum products up 21.9% from a year earlier, with diesel up 30.8% and gasoline up 21.1%, reflecting cost pressures linked to disruptions near the Strait of Hormuz and Korea’s reliance on imported energy.
- Officials estimate the fuel caps and tax cuts trimmed April inflation by about 1.2 percentage points, suggesting headline CPI would have been closer to 3.8% without those measures.
- Markets are now watching the BOK’s May 28 meeting, as three-year government bond yields have risen and analysts flag the chance of rate increases later this year if price pressures persist.