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BOK sees inflationary risks growing; Oct CPI may rise more than 3per cent

BOK sees inflationary risks growing; Oct CPI may rise more than 3per cent

FILE PHOTO: A woman shops at an underground shopping district in the Gangnam area of Seoul, South Korea, June 28, 2016. REUTERS/Kim Hong-Ji

SEOUL : South Korea's central bank said on Monday upside risks to its inflation forecast are growing and added it cannot rule out the possibility that consumer prices may rise more than 3per cent this month.

"Consumer price growth is expected to fluctuate significantly above 2per cent for some time and the upside inflationary risks have grown on rising energy and commodities prices and the unresolved bottlenecks in the global supply chain," the Bank of Korea (BOK) said in a report.

The BOK also said it cannot rule out the possibility that consumer inflation may hover above 3per cent due to low base effects caused by subsidies for mobile phone bills last year.

"Should the international oil price stay at the current level of around US$80 (per barrel) or rise further, the consumer price growth is expected to exceed the growth forecast of 2.1per cent seen in August," it added.

Earlier this month, the central bank kept interest rates steady, taking a breather after its first hike in nearly three years in August, but flagged further tightening could come as soon as November to curb rising inflation and household debt.

Annual consumer inflation reached 2.5per cent in September, staying above the BOK's 2per cent target for a sixth straight month. October data is due early next week.

(Reporting by Joori Roh; Editing by Sam Holmes)

Source: Reuters

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