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Inflation in South Korea hits 24-year high in July

Inflation in South Korea hits 24-year high in July

Inflation hit a 24-year high in South Korea in July, but other data suggest the pace of price increases may be close to a peak.

Meanwhile, signs of an economic slowdown sent bond yields down.

Bond yields were driven lower after the central bank commented that a rebound in inflation to 6.3% in July from 6% in June was what it expected when it raised interest rates unusually high last month.

Inflation in July rose the most since late 1998, and was in line with average estimates.

However, core inflation ended a three-month streak of gains, indicating a peak in underlying price pressures.

“It was encouraging that inflation came in as expected,” said an analyst at NH Investment and Securities, referring to several previous months when inflation tended to beat market expectations.

Analysts say price trends in South Korea are strongly influenced by the exchange rate and global oil prices, both of which are either stabilizing or declining.

The central bank’s statement that inflation was only what it expected was a subtle change in its public assessment of economic conditions,

Source: Capital