Inflation in South Korea accelerated in June, reaching its fastest pace since December 2023, matching economists' forecasts and strengthening market expectations that the central bank will keep a close watch on core price pressures.

Data released by the statistics agency on Thursday showed the Consumer Price Index rose 3.2% year-on-year in June, up from 3.1% in May. This matched the 3.2% increase forecast in a Bloomberg survey of economists.

Excluding volatile food and energy prices, the core inflation rate held steady at 2.5%, indicating underlying price pressures remain firm.

The data reinforces the increasingly hawkish stance of the Bank of Korea, which is scheduled to hold its next policy meeting on July 16. Policymakers view factors such as inflation, robust economic growth, a weak won, and surging home prices as increasingly pointing towards the need for tighter monetary policy.