Headline price stability masks persistent services inflation that is harder to manage and more visible to voters

Cooling inflation has led to stabilizing prices for goods in South Korea, according to the latest government data, as the central bank’s tight controls over interest rates appear to be working as intended.

But prices in the services sector that have bucked this disinflationary trend continue to weigh on households, and they will be harder to rein in with monetary tools despite the political risks that services inflation poses for the Lee Jae Myung administration.

Cooling inflation has led to stabilizing prices for goods in South Korea, according to the latest government data, as the central bank’s tight controls over interest rates appear to be working as intended.

But prices in the services sector that have bucked this disinflationary trend continue to weigh on households, and they will be harder to rein in with monetary tools despite the political risks that services inflation poses for the Lee Jae Myung administration.

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