SEOUL - The Organisation for Economic Cooperation and Development (OECD) has raised this year’s inflation outlook for South Korea amid higher energy prices, South Korea’s finance ministry said Monday. The OECD revised up the country’s 2022 inflation outlook to 5.2 percent from its June estimate of 4.8 percent, the Ministry of Economy and Finance said citing the biennial OECD report on the South Korean economy. It was the same as the Bank of Korea (BOK)’s forecast in August, but the OECD outlook was higher than the finance ministry’s estimate of 4.7 percent. The Paris-based organisation upgraded South Korea’s 2023 inflation outlook by 0.1 percentage point to 3.9 percent. South Korea’s consumer price index (CPI) gained speed this year, with an increase of 5.4 percent in May, 6.0 percent in June and 6.3 percent in July. It slightly slowed to 5.7 percent in August. To curb runaway inflation, the BOK launched the tightening of its monetary policy in August last year, hiking its key policy rate in seven steps from 0.5 percent to 2.5 percent.

“The preemptive moves (by the BOK) have helped keep inflation expectations anchored and nominal wage increases modest so far. However, year-ahead inflation expectations have increased lately and upward pressure on nominal wages is expected to mount as the labor market tightens,” the OECD said.

South Korea’s real gross domestic product (GDP), adjusted for inflation, was forecast to expand 2.8 percent this year, revised up from the OECD’s previous estimate of 2.7 percent. Next year’s growth outlook was lowered from 2.5 percent to 2.2 percent.