South Korea Inflation Reaches Two Year High

Inflation in South Korea accelerated in May, rising to its highest level in more than two years and coming in above economists' expectations as higher oil prices tied to the conflict in the Middle East pushed costs higher.

The country's Consumer Price Index (CPI) increased 3.1% from a year earlier, up from 2.6% in April and marking the largest annual increase since March 2024. Rising energy costs were a major factor, with petroleum product prices climbing 24.2% compared to a year ago, while international airfares surged 33.5%.

The inflation report comes after the Bank of Korea signaled it may take a tougher approach to inflation. Last week, the central bank raised its 2026 inflation forecast to 2.7% from 2.2%, citing persistent price pressures and the need to support the weakened Korean won. The Bank of Korea's next policy meeting is scheduled for July 16.