South Korean Inflation Slows For First Time in Six Months

Bloomberg

Published Jul 01, 2021 07:00PM ET

Updated Jul 01, 2021 07:18PM ET

South Korean Inflation Slows For First Time in Six Months

(Bloomberg) -- The pace of South Korean inflation slowed for the first time in six months, according to data that supports the central bank’s view of recent price pressures as temporary.

Consumer prices rose 2.4% from a year earlier, slowing from a 2.6% pace in May, data from the statistics office showed Friday. Economists had expected the pace would decelerate only to 2.5%.

The slowdown adds support to the Bank of Korea’s argument that recent price data have been boosted by comparison with last year’s dismal figures and some inflationary pressures are likely to fade going forward. The central bank sees inflation fluctuating around its 2% target for the rest of the year before sliding lower in 2022.

Inflation may get a boost from a 33 trillion won extra budget proposed by the government this week to provide cash handouts to 80% of South Korean households. If the stimulus package passes, it would be among the largest since the pandemic hit last year.

Vaccinations have also been accelerating even though they have yet to reach the majority of the population. The latest threat to consumer activity has been the Delta variant of the coronavirus, which prompted authorities to delay plans to ease social distancing rules in Seoul from this week.

©2021 Bloomberg L.P.