Inflation growth to top 5 pct for some time: finance minister

All News 14:10 May 27, 2022

SEOUL, May 27 (Yonhap) -- South Korea's inflation growth is expected to exceed 5 percent for a certain period of time due to upward price pressure caused by soaring energy costs and the economic recovery, the finance minister said Friday.

Finance Minister Choo Kyung-ho made the assessment a day after the Bank of Korea (BOK) conducted its first back-to-back rate hike in 15 years to tame elevated inflation.

"As the BOK chief said yesterday, consumer prices will likely exceed 5 percent for a certain period of time," Choo told reporters after his first meeting with chiefs of five financial services groups.

Finance Minister Choo Kyung-ho (R) speaks at a meeting with chiefs of five financial services groups in Seoul on May 27, 2022. (Yonhap)

BOK Gov. Rhee Chang-yong said Thursday consumer inflation will likely grow 5 percent or more for some time and could maintain its growth at 3-4 percent even early next year.

Concerns about stagflation, a mix of slowing growth and high inflation, have mounted amid the Ukraine crisis and the Federal Reserve's aggressive rate hikes.

During the meeting with the financial group chiefs, Choo voiced concerns that Asia's fourth-largest economy is slowing down, while the country's inflation is "sharply" rising.

The BOK on Thursday raised its 2022 inflation outlook to a 14-year high of 4.5 percent, from its previous 3.1 percent estimate. The central bank also lowered its growth forecast for the South Korean economy to 2.7 percent from 3 percent for this year.

Consumer prices spiked 4.8 percent on-year in April, the fastest increase in more than 13 years, due to soaring energy costs and a rebound in demand from the pandemic. The April figures followed a 4.1 percent rise in March.