The growth of South Korea's inflation slowed down in July, but it did not deter analysts from predicting further interest rate cuts.

The consumer price index (CPI) climbed 2.1% year on year, lower than 2.2% in the previous month, according to a Tuesday release from Statistics Korea.

The CPI is line with the market consensus of 2.1% and roughly aligned with the 2.13% predicted by analysts surveyed by Reuters.

On a month-on-month basis, the transport index jumped 1.5% as the base fare of Seoul subway transport rose at the end of June. Food increased 0.8%, while recreation, and restaurant and hotel indices both climbed by 0.6%.

ING's senior economist for South Korea and Japan, Min Joo Kang, said that the summer electricity fee waivers helped bring down the electricity prices, with the utilities index dropping 1.2% from a month ago.

Meanwhile, the index for furnishings, household equipment and routine maintenance slipped 0.1% from the preceding month, data from Statistics Korea showed.

Analysts believe the monetary policy should continue to ease as inflation remains above the Bank of Korea's 2% target. Kang said the negative gap in the gross domestic product will remain as higher inflation growth is expected in the second half.

"As such, BoK easing is needed. The timing will likely depend on developments in the housing market," Kang said. "Recent data showed a stabilizing Seoul housing market. But we believe it's premature for the BoK to deliver a cut. Thus, the BoK is likely to take a wait-and-see approach in August and cut in October."

Barclays Bank economist Bumki Son also believes that a rate cut will be considered as the economy is "still operating below full capacity." October is the most appropriate time to cut rates, Son said, according to a Bloomberg News report on Tuesday.