South Korea August inflation +3.1% y/y, weaker than expected

South Korean consumer inflation grew slightly below expectations in August, though it remained near a two-year high, according to data released by the country's Ministry of Statistics on Wednesday. The Consumer Price Index (CPI) rose 3.1% year-on-year, falling short of the forecasted 3.2% increase. This figure marked a slight uptick from the 2.8% growth observed in July.

Despite the modest year-on-year increase, monthly inflation dipped to 0.2%, which was less than the anticipated 0.3%. The core CPI, which excludes volatile food and energy prices, expanded by 3.4% in August, a sharp acceleration from the 2.6% growth recorded in July.

The CPI inflation trend is inching closer to the 3.2% peak seen in June, driven primarily by soaring energy costs following the collapse of a U.S.-Iran ceasefire in August. Additionally, telecom prices played a significant role in the inflation surge, especially after major carriers implemented half-price mobile fee discounts in August 2025.

The data suggests that South Korean inflation is showing signs of "stickiness," a pattern that may prompt the Bank of Korea (BOK) to consider further interest rate hikes. In fact, the BOK had already increased rates by 25 basis points to 3% in August, marking its second rate hike this year.