Summary

• High energy prices drove up South Korean inflation in April, but government measures limited the increase.
• Going forward, we expect inflation to rise further despite the government measures, reaching around 3% as early as June.
• The Bank of Korea is likely to hold rates steady in May, though rising inflation may prompt a hike as early as July.

By Min Joo Kang, Senior Economist, South Korea and Japan

Government policies absorb some of energy shock

South Korea’s consumer price inflation accelerated to 2.6% year-on-year in April from 2.2% in March, matching market consensus but below our

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