[Analysis] May Consumer Prices Near 3%: Concerns Over Household Purchasing Power

May Consumer Prices Expected to Approach 3%

According to a survey of eight financial institutions released on May 27, consumer prices in May are projected to rise by 2.96% year-over-year, nearing the 3% threshold (Source: Yonhap Infomax). This is largely driven by prolonged geopolitical risks in the Middle East, which have resulted in sustained high oil prices and exchange rates, putting continuous cost-push pressure on the broader economy. As import prices pass through to the domestic market with a time lag, the inflation perceived by households is even steeper than the headline figures suggest.

Upward Pressure from Energy and Services

The core drivers of this inflationary trend are the heavy burden of energy prices and rising service costs (such as rent and airfares). Although a recent decline in agricultural prices has provided a slight buffer, it remains insufficient to stabilize the everyday cost of living for households.

• Consumer Sentiment: The 'May 2026 Consumer Sentiment Survey' published by the Bank of Korea shows that the Composite Consumer Sentiment Index (CCSI) improved to 106.1 compared to the previous month.

Inflation Anxiety: However, consumers' anxiety regarding future price levels remains stubbornly high. Furthermore, global high-price shocks continue to dampen sentiment, as evidenced by the U.S. Conference Board's May Consumer Confidence Index dropping to 93.1 (Source: iMBC).

Focus on the BOK's Revised Economic Outlook

Amid growing concerns over entrenched inflation, market attention is heavily focused on the Bank of Korea's Monetary Policy Board meeting scheduled for May 28. Market experts widely anticipate that the central bank will significantly revise both its economic growth and inflation forecasts upward in its latest economic outlook report (Source: ChosunBiz).

Although international oil prices (WTI) have recently shown some signs of moderation, falling below $100 per barrel, the embers of energy-driven inflation still remain. Consequently, the prevailing market consensus suggests that the Monetary Policy Board will opt for a 'hawkish hold,' keeping the base interest rate unchanged due to complex domestic and global uncertainties. Macroeconomic policy decisions designed to defend households' real purchasing power are now more critical than ever.