South Korea’s Inflation reaccelerates in July

South Korea’s headline inflation picked up at a stronger-than-expected pace in July, reaccelerating due to higher prices for agricultural and oil products, after easing for three consecutive months.

The benchmark consumer-price index rose 2.6% from a year earlier, following a 2.4% gain in June, the country’s statistics office said Friday.

That was stronger than the median forecast of 2.5% projected by 19 economists polled by The Wall Street Journal.

Compared with the prior month, the index rose 0.3% in July compared with the median forecast of a 0.2% increase. In June, it fell 0.2% from the previous month.

Core CPI, which strips out volatile food and energy prices, gained 2.2% from a year ago in July and rose 0.3% from a month earlier.

Unfavorable weather conditions for harvesting agricultural products sent prices for vegetables and fruits higher in July, restoking inflationary pressure. Prices for petroleum products also increased as the effect of temporary fuel-tax cuts tapered off.

The pickup in headline inflation may stoke caution among monetary-policy makers even if they still expect inflation in South Korea to keep trending lower.

The Bank of Korea expects inflation to average 2.6% in 2024 and 2.1% next year in South Korea. Inflation averaged 3.6% in 2023 in the country.

Market expectations have recently grown for the central bank to pivot toward policy easing, given that the country’s economy risks losing steam after a prolonged period of tight monetary policy.

The bank in July held the base rate steady at a 15-year high of 3.50% for a 12th straight time. Most analysts forecast a rate cut in October or November.

Write to Kwanwoo Jun at Kwanwoo.Jun@wsj.com