S.Korea’s inflation expectations hit 10-year high in June

South Korea’s inflation expectations hit the highest in over 10 years this month, fueling worry about faster-than-expected interest rate hikes, central bank data showed Wednesday.

Inflation expectations, which gauge outlook among consumers over headline inflation for the next 12 months, stood at 3.9 per cent in June, up 0.6 percentage points from the previous month, Xinhua news agency reported quoting Bank of Korea (BOK).

It was the highest in more than 10 years since April 2012, marking the fastest monthly increase since relevant data began to be compiled in 2008.

The high inflation expectations raised the possibility for the BOK to hike rates at a faster pace than expected.

The BOK has raised its key rate by 25 basis points five times since August last year. Expectations grew for the central bank to lift rates by a half percentage point in July, though the BOK has never taken such an action since 1999.

The composite consumer sentiment index (CCSI) came to 96.4 in June, down 6.2 points from the previous month.

The index fell below 100 since February 2021, indicating pessimists outnumbering optimists over the economic situation.

The results were based on a survey of 2,500 households conducted between June 13 and 20.

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