South Korea inflation seen nearing 3% in May

May 6 (Asia Today) -- South Korea's inflation rate is expected to approach 3% in May as rising oil prices and base effects from food costs add upward pressure, officials said Wednesday.

Consumer prices in April rose 2.6% from a year earlier, the fastest pace in one year and nine months. Economists warn inflation could accelerate further this month as energy costs remain elevated and agricultural price comparisons shift.

According to government data, petroleum products accounted for 0.84 percentage points of April's inflation, nearly one-third of the total increase. Diesel prices surged 30.8%, raising transportation and logistics costs and fueling broader increases in production expenses.

Yoo Sang-dae, senior deputy governor of the Bank of Korea, said oil prices are expected to stay high in May while base effects in agricultural, livestock and fisheries products could amplify overall inflation.

"It is difficult to rule out the possibility that inflation will approach or exceed 3%," Yoo said during a policy review meeting.

Global institutions have also raised their outlook for South Korea's inflation. A Bloomberg survey of 38 organizations showed the average forecast for 2026 consumer price growth rose to 2.5% as of late April, up from 2.3% a month earlier.

The government said its policy measures helped limit price increases. Vice Finance Minister Lee Hyoung-il told a Cabinet meeting that a fuel price cap and fuel tax cuts lowered April inflation by an estimated 1.2 percentage points. Without those measures, inflation would have reached 3.8%, he said.

Still, officials acknowledged mounting uncertainty tied to external risks such as tensions in the Middle East.

The government said it will maintain an all-agency response to stabilize prices, prioritizing energy costs while closely monitoring essential consumer goods.

Some economists cautioned that fiscal measures alone may have limited impact. Kim Sang-bong, an economics professor at Hansung University, said additional fuel tax cuts are constrained and could weigh on government revenue.

-- Reported by Asia Today; translated by UPI

© Asia Today. Unauthorized reproduction or redistribution prohibited.

Original Korean report: https://www.asiatoday.co.kr/kn/view.php?key=20260506010001140

Copyright 2026 UPI News Corporation. All Rights Reserved.

This story was originally published May 6, 2026 at 7:34 PM.