South Korea's inflation exceeds government target

By Jiyeon Lee, CNN

The consumer price index in South Korea increased 4.4% in June compared with a year ago, according to official figures.

STORY HIGHLIGHTS

The government raises its target inflation rate to 4%
It lowers its growth projections to 4.5% for this year
The central bank has been slowly raising its base interest rate this year

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South Korea

(CNN) -- South Korea's inflation surpassed the government target range for six consecutive months, mounting pressure on the central bank's efforts to curb inflation without inhibiting domestic demand.

The consumer price index rose 4.4% in June compared with a year ago and 0.2% higher than the previous month, Statistics Korea announced Friday.

The government on Thursday raised its target inflation rate to 4% and lowered its growth projections to 4.5% for this year, down 0.5% in the face of weakened global demand.

The central bank has been slowly raising its base interest rate this year, bringing it up to 3.25% last month.

It is uncertain whether the Bank of Korea will be able to move it further up this month due to the recent hike last month, and it is more likely to happen in August, according to a HSBC study.

"The Bank of Korea just hiked rates contrary to market expectations and officials may wish to wait a little longer before putting on the squeeze again," according to a research note from HSBC.