Inflation expected to edge up in Aug. on base effect: BOK

South Korea's central bank anticipates a slight uptick in inflation for August, attributed to a base effect, as reported on Tuesday. Deputy Governor Lee Ji-ho disclosed this during an inflation review meeting. While consumer prices in July decelerated due to a decline in petroleum and agricultural product prices, core inflation ticked upward, primarily driven by surging durable goods prices and cost-push factors.

Lee further explained that the anticipated acceleration in August is primarily due to the residual impact of substantial discount programs rolled out by certain mobile operators last year. Government figures revealed that consumer prices in South Korea climbed 2.8 percent year-on-year in July, marking the first decline below the 3 percent threshold in three months.

This moderation was facilitated by stabilizing oil prices following a temporary ceasefire in the Middle East and government-imposed caps on oil prices. July saw a 15.5 percent year-on-year increase in oil product prices, a notable easing from June's 24.7 percent surge. Agricultural product prices, however, declined by 2.2 percent year-on-year, the steepest drop observed in a year.

Core inflation, which excludes the more volatile food and energy sectors, expanded by 2.6 percent compared to July 2023, marking the most substantial increase since December of last year.