Consumer price inflation could reach as high as 3.0% in the second half of this year, according to a new forecast.
The Hyundai Research Institute said in a report released Sunday that its baseline scenario projects second-half consumer price inflation at 2.7%, with a forecast range of 2.5 to 3.0 percent.
"Price increases in the first half were driven mainly by rising petroleum product prices following the surge in international oil prices after the Middle East war," the institute said. "However, as Middle East risk has eased somewhat and international oil prices have stabilized, attention should now shift to price trends in categories other than petroleum products."
By category, the institute projected that prices for agricultural, livestock and fishery products would face growing upward pressure in the second half due to worsening supply conditions caused by extreme heat and heavy rainfall.
Rent inflation is also expected to continue rising, driven by a shortage of jeonse supply, tighter lending regulations and stricter owner-occupancy requirements.
Public service prices are forecast to accelerate beyond first-half levels, partly due to a base effect from the temporary reduction in telecommunications fees last year.
Industrial product price inflation is expected to slow slightly, though the institute warned that upward pressure could intensify if Middle East risks resurface. Electricity, gas and water prices, along with personal service prices, are expected to remain broadly in line with first-half levels, supported by the government's policy of freezing public utility rates.
"If risks such as a renewed spread of Middle East tensions, a super El Niño event, real estate market instability and cost pass-throughs from wage increases materialize, second-half consumer price inflation could climb to 3.0%," the institute said.
The institute added that "amid continued volatility in international oil prices, the government should strengthen price management systems for key product categories and sustain policy efforts for livelihood and economic stability, in preparation for the possibility that broader inflation risks materialize."
Meanwhile, the Ministry of Statistics is set to release its July 2026 consumer price trends report on Tuesday. The consumer price index rose 3.2% year-on-year in June, the highest rate since December 2023, extending a streak of 3%-plus readings for two consecutive months following May's 3.1% gain. Rising international oil prices stemming from the Middle East war have been the primary driver.
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