Inflation expectations inch up in Oct. amid interest rate hikes: BOK survey

SEOUL, Oct. 25 (Yonhap) — South Korea’s inflation expectations edged up on-month in October amid the Bank of Korea (BOK)’s aggressive rate hikes to bring price growth under control, a central bank survey showed Tuesday.

Ordinary people expected consumer prices will grow 4.3 percent over the next one year, up 0.1 percentage point from 4.2 percent polled the previous month, according to the poll conducted by the BOK.

This represented the first on-month rise in three months.

Those polled cited possibly rising public fees and prices of farming and oil-related products as major reasons for expecting inflation to climb down the road.

The survey is one of the closely watched polls that could provide a glimpse into how fast inflation will increase as high expectations could lead to more demand for pay raises and eventually additional upward inflation pressure.

The country’s consumer prices, a key gauge of inflation, rose 5.6 percent on-year in September, slowing from the previous month’s 5.7 percent rise. The BOK, however, forecast inflation could stay in the 5-6 percent range for a considerable period of time.

The BOK has hiked its key policy rate by a combined 2.5 percentage points since August last year to keep inflation in check, including the second-ever big-step rate increase of 50 basis points early this month.

The central bank is widely expected to deliver another rate increase before the end of this year.