Posted Feb 7, 2022 by Martin Armstrong
Inflation is soaring worldwide. South Korea experienced a near 10-year high in inflation this January after prices spiked 3.6% YoY. This is the tenth consecutive month that South Korea’s inflation ran above the central bank’s 2% target. Core inflation spiked 2.6% from the same time period last year as costs for goods and services rose.
Fresh food prices spiked 6% YoY, while agricultural and fisheries noted a 6.3% gain. Rising fuel and automotive prices produced a 7.2% YoY rise in transportation costs. Gas prices alone have risen by 13% in the last year, with diesel seeing a 16% increase.
The Bank of Korea (BOK) noted during its January meeting that it was concerned about rising prices and raised rates by 0.25 points to 1.25% to match pre-pandemic levels. Asia’s fourth-largest economy had bounced back from this pandemic after experiencing the fastest economic growth on record last year when GDP expanded 4%. The BOK believes the economy will grow by 3% in 2022, and the markets are anticipating additional rate hikes throughout the year. However, BOK Governor Lee’s term ends in March, which coincides with the nation’s presidential election, leading to increased uncertainty.
Tags: Bank of Korea, BOK, Inflation, South Korea