South Korea's consumer price inflation increased 3.1% year-on-year in August, slightly below the 3.2% forecast and up from 2.8% in July, government data showed.
On a monthly basis, prices rose 0.2%, missing the 0.3% estimate and decelerating from July's 0.3% gain. Core inflation, which excludes volatile food and energy prices, accelerated to 3.4% from 2.6% the prior month, reflecting persistent price pressures.
The inflation reading remains near a two-year high of 3.2%, reached in June, driven by elevated energy costs and telecommunication prices. Oil prices were supported by the collapse of a U.S.-Iran ceasefire agreement in August, while telecom costs were influenced by a favorable base effect from 50% mobile tariff discounts offered by major carriers in August 2025.
The persistence of inflation is expected to reinforce the Bank of Korea's case for further interest rate hikes. The central bank raised its benchmark rate by 25 basis points to 3% in August, its second increase of the year.
Inflation has remained elevated despite prior policy tightening, with the Bank of Korea citing strong domestic demand and external cost pressures as key drivers.
