South Korea: inflation drops to 2.8% in July, but core rises

WHAT HAPPENED

Inflation in South Korea dropped from 3.2% to 2.8% in July. But excluding gasoline and food, the core rose to 2.6%, its highest pace since December 2023. Services continue to become more expensive.

WHY IT MATTERS

The overall drop reflects cheaper gasoline and fresh food, not broad relief. Eating out, transportation, and personal care continue to rise. The Bank of Korea faces a dilemma: raise the rate to curb prices or avoid making loans and mortgages more expensive.

AND FOR YOUR PORTFOLIO

For a Korean family, 100,000 won of average shopping a year ago now costs 102,800. For the portfolio, the data shows that rates may remain high in Asia: this makes loans more expensive and could slow consumption, housing, and businesses dependent on credit.