The Bank of Korea (BOK) assessed that consumer price inflation expanded slightly to 2.2% in March, but noted that the government's price stabilization measures limited the extent of the increase.
The BOK held a "price situation review meeting" chaired by Senior Deputy Governor Yoo Sang-dae on Wednesday to examine recent price trends and the outlook ahead.
"Despite a sharp rise in petroleum prices, March consumer prices rose only slightly from the previous month's 2.0%, thanks to falling prices of agricultural, livestock and fishery products and the effects of government measures," Yoo said.
Petroleum prices surged 9.9% year-on-year, driven by rising international oil prices amid Middle East tensions and a weaker won against the dollar, pushing up overall inflation. In contrast, prices of agricultural, livestock and fishery products fell 0.6% due to increased shipments, offsetting upward price pressure.
Core inflation, which excludes food and energy, eased to 2.2% from 2.3% the previous month. The decline reflected a moderation in travel-related service prices that had temporarily risen during the Lunar New Year holiday period.
The BOK noted that the government's petroleum price cap system contributed to price stability. The measure, which sets an upper limit on refiners' supply prices, helped constrain the rise in petroleum prices, the central bank explained.
Regarding the future inflation path, the BOK flagged upward risks. "From April onward, inflation may widen due to the impact of rising international oil prices," the central bank said, adding that "stable food price trends and the government's price stabilization policies are expected to partially offset cost-side upward pressure."
"Given the significant uncertainty surrounding developments in the Middle East and the resulting oil price trajectory, we will closely monitor the price situation," the BOK said.
