By Jihoon Lee and Choonsik Yoo

SEOUL (Reuters) -South Korea’s client inflation picked up greater than anticipated in Could to a close to 14-year excessive on a worldwide surge in supplies and meals prices, information confirmed on Friday, cementing the case for additional rate of interest raises.

The patron worth index (CPI) rose 5.4% in Could from a yr earlier than, the Statistics Korea information confirmed, rushing up from a 4.8% rise the earlier month and quicker than 5.1% tipped in a Reuters ballot.

It even topped the best forecast of 5.2% within the survey and was the quickest annual development since August 2008, whereas standing above the central financial institution’s 2% goal for a 14th consecutive month.

“We do not count on rates of interest to be raised quicker due to right this moment’s figures, however the central financial institution might want to maintain the tightening stance whereas looking forward to any signal of inflation peaking out round July,” stated Kong Dong-rak, an economist at Daishin Securities, who expects the central financial institution to lift charges two extra occasions this yr.

Each the central financial institution chief and the finance minister have stated inflation would keep above 5% for a number of months. The Financial institution of Korea sharply raised this yr’s inflation projection to 4.5% final week from the earlier 3.1%.

The BOK has raised coverage charges by a complete of 1.25 proportion factors in 5 steps since August final yr, together with a 25 basis-point hike final week, and has warned of extra will increase to battle the inflation.

The core CPI, which excludes unstable meals and power costs, rose 3.4%, marking the quickest rise since February 2009.