The Bank of Korea indicated on Wednesday that South Korea is likely to continue experiencing high consumer prices, even after the conclusion of Middle East conflicts, influenced by income growth stemming from the technology industry's boom.

The central bank's report noted that despite progress in peace talks between the United States and Iran, upward pressure on consumer prices persists, with prices expected to remain elevated for a "considerable period of time."

Influenced by global energy price fluctuations, South Korea's Consumer Price Index (CPI) rose 3.1% year-on-year in May, marking the fastest increase in 26 months, with a similar increase last recorded in March 2024.

The Bank of Korea pointed out that while the government has made some progress in managing the impact of rising global oil prices on inflation, upward pressure from public service charges is anticipated to gradually intensify.

Recent wage increases in the technology sector are also expected to affect other industries, ultimately leading to greater upward pressure on consumer prices.

This analysis was released as major South Korean tech firms, including Samsung Electronics and SK Hynix, have been distributing substantial bonuses to employees following record-breaking performances in their memory chip businesses.

The central bank stated that it expects consumer price inflation to remain around 3% in the second half of 2026, with core inflation—which excludes volatile food and energy prices—holding steady at approximately 2%.

The Bank of Korea highlighted that cost increases driven by rising crude oil prices and a weak Korean won are projected to affect prices beyond just petroleum products.

The bank also noted that during the Russia-Ukraine conflict, energy prices were highly volatile, with the spillover effects of crude oil price increases impacting non-energy products after about six months, and the effects lasting for roughly a year.