S. Korea inflation approaches decade-high

South Korea’s consumer inflation surged to an almost 10-year high in October amid higher costs of oil products, rentals, and outdoor dining. The inflation increase added pressure to policymakers ahead of the last monetary policy meeting of the year.

Government data on Tuesday showed that the country’s Consumer Price Index (CPI) went up 3.2% from a year earlier in October. The growth was the fastest since January 2012 and up from the 2.6% increase in September.

The data’s breakdown showed a 27% increase in the cost of petroleum, while housing rentals went up 1.8% year on year. The cost of outdoor dining likewise jumped 3.2%, while other accommodation also added 2.3%.

These developments put the Bank of Korea’s (BOK) monetary policy board under pressure to increase the base rate further at the November 25 meeting, following the bank’s first rate hike in almost three years in August.

In October, BOK Governor Lee Ju-yeol flagged that further tightening could come as soon as November to battle the soaring inflation and household debt.

The BOK projected a 2.1% inflation for the rest of 2021 and 1.5% for 2022. However, forecast revisions will be announced at the November meeting.

Tuesday’s data also showed a 2.4% rise year on year in core CPI, the fastest growth since December 2015 and higher than September’s 1.5%.