South Korea's Ministry of Data and Statistics reported that the consumer price index, or CPI, a key gauge of inflation, rose 2.9% in September from a year earlier, in line with analyst expectations, after rising 3.1% in August. The report said diesel prices surged 20% and gasoline prices rose 11.8%, with South Korea heavily dependent on energy imports. Prices of agricultural, livestock and fishery products edged down 0.3%, led by declines of 9.2% in napa cabbage and 15.2% in apples. Core CPI, which excludes food and energy prices, rose 2.8% in September from a year earlier, in line with expectations, after rising 3.4% in August. The still-high inflation figures are expected to support the Bank of Korea, or BOK, in pressing ahead with tight monetary policy, after the BOK board raised interest rates at consecutive meetings in July and August, leaving the policy rate at 3%. The BOK forecasts CPI will rise 2.7% in 2026 and 2.3% in 2027, while core CPI is expected to be 2.5% both this year and next year.
Still-high inflation supports further BOK rate hikes, which would strengthen the won versus the dollar.
