Choonsik Yoo, Jihoon Yoo

SEOUL (Reuters), South Koreans predict inflation will average 3.1% per year over the next 12 month, driven by increasing global energy prices. The result of a Bank of Korea survey of South Korean consumers, released Wednesday.

According to the same survey, consumers were expecting higher borrowing costs in coming months. This confirms market expectations that central banks will increase interest rates further over the next few months. They have already increased four times since August.

Moon Hong-cheol (economist at DB Financial Investment) said that although the survey index partially reflects a lagging price effect, this finding will certainly influence central bank policymakers.

According to a survey by the central bank in March, 2.9% was the median inflation forecast for the next year. Inflation expectations for the coming year were 3.1% in April 2013. This April 2022 reading is now at 2.9%.

Last week the International Monetary Fund (IMF), which had previously forecast South Korea’s inflation at 3.1%, raised its projection for 2022 to 4.0%.

Consumer sentiment index from a survey of 2500 households between April 12th and 19 rose 3 months to 103.8, from 103.2 in March. This index was above 100 points for the fourteenth consecutive month.