-- South Korea's inflation in April climbed to its highest in two years as the Middle East war triggered oil price hikes.
The consumer price index or CPI rose 2.6% from a year earlier, the steepest since July 2024, according to Wednesday data from the Ministry of Data and Statistics.
The current CPI was in line with the median forecast of analysts surveyed by Reuters.
Excluding food and energy, the CPI grew 2.2% year on year.
Data from the Bank of Korea showed that the price for oil and petroleum jumped 21.9% in April from 9.9% a month earlier as the war in Iran triggered global oil price shocks over concerns the global crude supply will dwindle due to the closure of the Strait of Hormuz.
On the contrary, the prices agricultural, livestock and fishery products slipped 0.5% in April due to increased supply of major agricultural products, the central bank said.
Hana Securities economist Chun Kyu-yeon said the government's fuel price caps helped ease inflation pressure. However, service price inflation is expected to increased due to the rise in other transportation fares, such as airfare, Reuters reported Wednesday.
The ministry's data showed that the CPI for transportation grew 9.7% year on year.
Meanwhile, Daishin Securities economist Kong Dong-rak expects the Bank of Korea to be leaning to a rate hike to mitigate inflationary pressures, according to the Reuters report.
On the other hand, Min Joo Kang, ING's senior economist for South Korea and Japan, said a rate hike in July is more probable than one in May at the moment, while a 50-basis-point hike is expected in the second half of the year.
"With core inflation remaining near 2% and the government working to limit price hikes, the Bank of Korea is likely to pause in May," Kang said. "Strong exports, driven by semiconductors, will support overall growth, but the domestic economy will likely be hit harder by energy price hikes. This K-shaped recovery and widening growth gap between the IT and non-IT sectors should be a key challenge for the BoK."