South Korea July Inflation Hits Three-Month Low

South Korea's consumer price index rose 2.8% year-on-year in July, falling below market expectations of 3.0% and marking a three-month low. Monthly prices declined by 0.2%, the first drop in eight months, primarily due to a 5.5% decrease in petroleum product prices. This dip followed a decision by U.S. President Donald Trump to postpone an attack on Iran to seek a deal to increase Gulf oil supplies.

Despite the headline decline, core CPI rose 2.6%, representing the highest increase since December 2023. Lee Hyoung-il, the Vice Finance Minister of South Korea, cautioned that upward price pressures persist, citing uncertainties regarding the war in the Middle East.

To manage ongoing inflation risks linked to brisk economic growth, the Bank of Korea recently raised interest rates for the first time in three-and-a-half years.