Inflation fell to 2.4% in June, from May’s 2.7%, markedly undershooting market expectations. June’s figure marked the lowest inflation rate since July 2023. The decline was driven by moderating price pressures for housing and utilities, food and non-alcoholic beverages, and recreation and culture. However, inflation remained slightly above the Central Bank’s 2.0% inflation target, where it has been since early 2021.

Annual average inflation remained at May’s 3.1% in June. Meanwhile, core inflation was unchanged, coming in at May’s 2.2% in June.

Finally, consumer prices fell 0.23% in June over the previous month, swinging from the 0.08% increase recorded in May. June’s result marked the weakest reading since November 2023.

On the monetary policy implications, Nomura analysts said:

“The CPI report bodes well for the inflation outlook, and w?e believe the probability of an August cut has increased to 30% from 15%. However, we maintain our baseline view that the BOK will lower its policy rate from October onwards. Our view is that KRW depreciation pressures continue to constrain the BOK’s ability to decouple from the Fed, as rate cuts before the Fed can increase the depreciation pressures on KRW.”