By Joori Roh
SEOUL (Reuters) -South Korea’s consumer inflation accelerated to a near 10-year peak in October on higher costs of oil products, housing rentals and outdoor dining, putting pressure on policymakers ahead of the last monetary policy meeting of the year.
The consumer price index (CPI) jumped 3.2% from a year earlier in October, government data showed on Wednesday, the fastest growth since January 2012 and up from a 2.6% rise in September.
That matched a 3.2% increase tipped by analysts in a Reuters survey and remained above the central bank’s 2% target for a seventh straight month.
The breakdown of data showed the cost of petroleum surged 27.3%, while that of housing rentals rose 1.8% on year. Costs of outdoor dining increased 3.2%, while other services including accommodation also rose 2.3%.
That puts the Bank of Korea’s (BOK) monetary policy board under pressure to raise the base rate further at the Nov. 25 meeting, following its first rate hike in almost three years in August.
Governor Lee Ju-yeol last month flagged further tightening could come as soon as November to curb rising inflation and household debt.
The BOK currently sees inflation standing at 2.1% for the whole of 2021 and 1.5% for 2022, but the revision of forecasts will be announced at the November meet.
Wednesday’s data also showed core CPI rose 2.4% year-on-year, the fastest growth since December 2015 and up from 1.5% in September.
Month-on-month inflation rose 0.1%, slowing from September’s 0.5% rise but in line with forecasts.
New rules aimed at moving South Koreans toward “living with COVID-19” came into effect on Monday and are expected to boost consumer spending, with curfews on restaurants and cafes being lifted and all remaining curbs to be scrapped by February except for mask-wearing.
The government also decided to temporarily cut domestic tax on key oil products by 20%, which is expected to help consumers save up to 2.5 trillion won ($2.12 billion) over a six-month period.
($1 = 1,176.6400 won)
(Reporting by Joori Roh; Editing by Kim Coghill and Sam Holmes)
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