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Inflation expectations inch up in January amid continued monetary tightening

06:00 January 26, 2023

SEOUL, Jan. 26 (Yonhap) -- South Korea's inflation expectations inched up in January from a month earlier amid the Bank of Korea (BOK)'s continued monetary tightening to bring price growth under control, a central bank survey showed Thursday.

Ordinary people predicted that consumer prices will grow 3.9 percent over the next one year, up 0.1 percentage point from what was surveyed the previous month, according to the poll conducted by the BOK early this month.

It was the first on-month rise since November 2022.

The figures are closely watched as their upward move could cause businesses to raise prices and people to ask for pay raises, thereby resulting in more upward pressure on inflation going forward.

Of those surveyed, 75.9 percent cited utility bills as a major reason for their upward projection, followed by 33.5 percent and 29.2 percent choosing oil and farming product prices, respectively.

The latest figure came after the BOK delivered yet another quarter percentage point rate increase on Jan. 13 to tackle persistently high inflation. It marked the seventh straight rate hike since April last year, which also represented the longest span of monetary tightening.

In December, consumer prices rose 5 percent on-year, though it sharply slowed from a 6.3 percent spike in July, the fastest rise since November 1998. They still remained much higher than the BOK's mid-term target range of 2 percent.

The BOK has recently said that it will prioritize the inflation fight in carrying out its monetary policy going forward but with more focus on gauging the impact of rate increases on the economy and financial stability.

Korean cabbages and other vegetables for "gimjang," or making kimchi, a traditional Korean side dish normally made of fermented cabbage, are stacked at a traditional market in Seoul on Oct. 25, 2022.

kokobj@yna.co.kr
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