SEOUL: South Korea’s consumer inflation slowed for a second straight month in May to a 10-month low, official data showed on Tuesday, coming in lower than market expectations.

The consumer price index (CPI) in May stood 2.7% higher than a year earlier, slower than a rise of 2.9% in April and a gain of 2.8% tipped in a Reuters survey of economists.

It was the slowest annual increase since July. The index rose 0.1% on a monthly basis, according to Statistics Korea, after no change in April and compared with a 0.2% rise expected by economists.

By product, prices of agricultural products fell 2.5% over the month, but petroleum products rose 0.3% and personal service prices gained 0.4%.

“Inflation is expected to stabilise in the lower to mid-2% range in the second half,” Finance Minister Choi Sang-mok said, vowing to extend tariff cuts on food ingredients and refrain from raising public utility prices to stabilise inflation.

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The Bank of Korea (BOK) said consumer inflation would likely continue to ease gradually, as projected in May, but it needed to watch whether inflation converges on the central bank’s target of 2%.

Last month, the central bank said inflation would likely be on a decelerating trend throughout the year despite stronger economic growth, because domestic demand was seen recovering only modestly.

The BOK, which held interest rates steady for an 11th straight meeting in May, is expected to lower its policy rate by 50 basis points to 3.0% in the fourth quarter of 2024, according to a Reuters poll in May.

Core CPI, excluding volatile food and energy items, rose 2.2% year-on-year, slowing from a 2.3% rise in the previous month and marking the slowest increase since December 2021.