South Korea to Face Elevated Consumer Prices Amid Rising Incomes: BOK

SEOUL, June 17 (Yonhap) -- South Korea is expected to continue facing elevated consumer prices despite the end of the Middle East conflict amid rising incomes following the boom in the technology industry, the central bank said Wednesday.

The Bank of Korea (BOK) report said consumer prices are expected to "remain elevated for a significant period," noting upward pressures remain despite progress in peace talks between the United States and Iran.

South Korea's consumer prices rose 3.1 percent in May from a year earlier amid global energy price volatility, marking the fastest growth in 26 months after rising at the same pace in March 2024.

The BOK noted that while the government has made progress in containing the impact of higher global oil prices on inflation, upward pressure on public service charges is expected to gradually increase.

The recent rise in wages in the technology sector is also expected to affect other industries, eventually leading to additional upward pressure on consumer prices.

The analysis apparently came as South Korean tech firms, including Samsung Electronics Co. and SK hynix Inc., recently rolled out massive bonuses for their employees following record-breaking performances in the memory chip business amid the global artificial intelligence (AI) boom.

In the second half of 2026, the BOK said consumer price inflation is expected to remain around 3 percent, with core inflation, which excludes volatile food and energy prices, standing in the mid-2 percent range.

The BOK noted that rising costs caused by higher crude oil prices and the weak Korean won are expected to affect the prices of products beyond petroleum goods.

The central bank noted that during the energy price volatility caused by the war between Russia and Ukraine, higher crude oil prices had a spillover effect on non-energy products about six months later, with the impact lasting for around a year.