© Reuters. FILE PHOTO: A woman pushing her baby in a stroller shops in the Hongdae area of Seoul, South Korea, June 29, 2016. REUTERS/Kim Hong-Ji
By Jihoon Lee and Choonsik Yoo
SEOUL (Reuters) -South Koreans expect inflation to average around 3.1% over the next 12 months, led by rising global energy prices, the highest they have anticipated in nine years, according to a Bank of Korea survey of consumers released on Wednesday.
The same survey found consumers braced for higher borrowing costs ahead, cementing market views that the central bank would further raise interest rates over coming months, having already hiked four times since August.
“The survey index partly reflects a lagging effect from recent price rises but this finding will surely influence policy makers at the central bank,” said Moon Hong-cheol, economist at DB Financial Investment.
The central bank’s survey in March found median inflation expectation for the coming year at 2.9%. The April 2022 reading was the highest since April 2013, when inflation expectations hit 3.1%.
The International Monetary Fund (IMF) last week raised its forecast for South Korea’s 2022 annual inflation to 4.0% from 3.1% previously.
The consumer sentiment index from the survey of 2,500 households, conducted between April 12 and 19, rose to a 3-month high of 103.8 from 103.2 in March. The index stood above the 100-point threshold for a 14th consecutive month.