SEOUL: Inflation expectations in South Korea reached their highest level in more than a decade this month, central bank data revealed on Wednesday, raising concerns about interest rate increases that may occur sooner than anticipated.
According to data from the Bank of Korea, it is reported that inflation predictions for the next year were at 3.9% in June, an increase of 0.6 percentage points over the previous month. It marked the fastest monthly gain since pertinent data collection started in 2008 and was the greatest in more than ten years since April 2012.
High inflation expectations increased the likelihood that the Bank of Korea (BOK) would raise rates more quickly than anticipated. Since August of last year, the BOK has increased its benchmark rate by 25 basis points five times. Although the BOK hasn't raised rates by a half percentage point since 1999, there were growing expectations that it would do so in July.
The composite consumer sentiment index (CCSI) dropped 6.2 points from the prior month to 96.4 in June. Since February 2021, the index has been below 100, showing that there are more pessimists than optimists about the state of the economy. A survey of 2,500 households was conducted between June 13 and June 20 to determine the results.