Bank of Korea: "High Oil Prices Likely to Accelerate Consumer Price Increases After April"

Price Situation Review Meeting

The Bank of Korea has projected that the pace of consumer price increases may accelerate after April, due to the rise in international oil prices following the Middle East war.

Yoo Sangdae, Deputy Governor of the Bank of Korea. Photo by Yonhap News

Yoo Sangdae, Deputy Governor of the Bank of Korea, held a “Price Situation Review Meeting” at the Bank of Korea headquarters on the morning of April 2, examining the recent price situation and the future trend of prices.

Deputy Governor Yoo commented on the 2.2% month-on-month rise in consumer prices in March, stating, “While petroleum prices rose sharply, prices for agricultural, livestock, and fisheries products declined. Thanks in large part to the government’s price stabilization measures, such as the petroleum price ceiling, the overall increase was only slightly expanded.”

However, regarding the outlook after April, he stated, “The increase in international oil prices is expected to further accelerate the rise in consumer prices. Food prices are showing a stable trend, and government price stabilization measures, including the petroleum price ceiling, could help alleviate upward cost pressures on prices.”

Meanwhile, the consumer price index for March recorded a slight increase to 2.2%, up from 2.0% in the previous month. Petroleum prices, which had dropped 2.4% year-on-year as of February, surged by 9.9% in March compared to the same month last year, significantly widening the increase. This was due to the impact of the Middle East war, which pushed up international oil prices and the KRW/USD exchange rate. In contrast, prices for agricultural, livestock, and fisheries products turned to a year-on-year decline, dropping from a 1.7% increase to a 0.6% decrease, driven by expanded agricultural shipments.

The core inflation rate, which had been temporarily pushed up by increased travel demand during the Lunar New Year holidays, fell to 2.2% in March from 2.3% the previous month as the rise in travel-related service prices subsided.

Deputy Governor Yoo stated, “There is significant uncertainty regarding the future price trajectory, particularly due to developments in the Middle East and resultant oil price trends. We will remain vigilant and continue to closely monitor the price situation.”

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