South Korea's headline inflation moderated in July after reaching a 30-month high in June, partly because government measures helped restrain fuel and electricity prices.

Price pressures persisted, however, with inflation remaining above the central bank's 2% target.

The Ministry of Data and Statistics said Tuesday that the benchmark consumer-price index rose 2.8% in July from a year earlier, slowing from 3.2% in June -- the fastest pace since December 2023.

The reading was below the median forecast of 2.9% from 11 economists surveyed by The Wall Street Journal.

Consumer prices fell 0.2% in July from the previous month, compared with the poll forecast of a 0.1% decline. Prices edged up 0.1% on month in June.

Core CPI, which excludes volatile food and energy prices, rose 2.6% on year in July and rose 0.4% on month. The measure, which policymakers closely watch as a gauge of underlying inflation, has remained above 2% since September 2025 and has trended higher in recent months.

Price gains for petroleum products slowed as the government maintained a cap on retail fuel prices and moved to lower electricity tariffs to contain inflation.

Gasoline and diesel prices rose 13% and 22%, respectively, from a year earlier in July, slowing from increases of 23% and 34% in June. On a monthly basis, the prices fell 6.2% and 6.7%, respectively.

But growth in services prices remained elevated. Prices for international flights and overseas travel jumped 22% and 20%, respectively, from a year earlier in July, while insurance service prices rose 13%.

The Bank of Korea raised interest rates in July for the first time in more than three years, joining other central banks in tightening policy as surging oil prices caused by the prolonged Middle East conflict added to inflationary pressures.

A decline in retail gasoline prices and a cut in electricity rates are among the factors helping curb inflation, said Citigroup economist Jin-Wook Kim in a recent note. Still, rising prices for restaurant meals, tourism-related services and core goods continue to fuel inflationary pressures, Kim said.

Since the July rate increase, BOK Gov. Shin Hyun-song has signaled that further rate increases could follow in the coming months to curb stronger-than-expected inflation. He has said the pace of tightening will depend on incoming economic data.

Analysts remain divided over whether the central bank will raise rates again in August. Its next policy meeting is scheduled for Aug. 27.

The BOK is also due to update its growth and inflation forecasts at the meeting. In May, it raised its inflation forecast for 2026 to 2.7% from 2.2% and its 2027 forecast to 2.3% from 2.0%.