© Reuters. FILE PHOTO: Office workers pick up lunch boxes at a convenience store in Seoul, South Korea, June 24, 2022. Picture taken June 24, 2022. REUTERS/ Heo Ran/File Photo
By Jihoon Lee
SEOUL (Reuters) -South Korea’s consumer inflation accelerated for a second month in September, above market expectations, official data showed on Thursday, supporting prospects of the central bank maintaining its restrictive policy for some time.
The consumer price index (CPI) stood 3.7% higher in September from a year earlier, after recording a 3.4% rise in August. Economists in a Reuters survey had expected the figure to stay unchanged.
It was the second consecutive month the annual rate quickened, from a 25-month low of 2.3% in July, and marked the fastest annual rise in five months.
Finance Minister Choo Kyung-ho said after the data release that inflation would likely stabilise again from October with seasonal factors easing.
The central bank also said inflation, which was slightly higher in September than its projection, would still ease to around 3% by the end of the year.
“With bond yields rising sharply recently and inflation data coming in above expectations two weeks before the next rate decision, it is unlikely the central bank will soften its hawkish stance,” said Ahn Jae-kyun, a fixed-income analyst at Shinhan Securities.
“But, it was largely due to Chuseok thanksgiving holidays and high oil prices, while price pressures continuously eased in the services sector, which is more important from the policy perspective.”
The Bank of Korea held interest rates steady for a fifth straight meeting at its last review in August, seeking to balance softer inflation and heightened risks to growth. It next meets on Oct. 19.
On a monthly basis, the index rose 0.6%, according to Statistics Korea, compared with a 1.0% jump the previous month and a median 0.3% forecast.
Broken down by sector, prices of petroleum products jumped 4.0% over the month, agricultural prices climbed 4.1%, while public utility prices added 5.3%.
Core CPI, which excludes volatile food and energy prices, was 3.3% higher in September on an annual basis, the same as in August and July.