East Asia Econ

Korea - services inflation still firm

Dearer oil boosted pump prices and so headline CPI in April, but also airline fares and so services inflation. That is another reason to think that personal services inflation of near 4% YoY isn't a true reflection of underlying prices. But it will still matter for the BOK if the chip cycle holds up

Paul Cavey

May 6, 2026 • 3 min read

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East Asia Today

Some charts from today's longer piece looking at the BOJ's analysis of inflation in its outlook report last week. Obviously, the BOJ's big focus was the impact of Iran, so also today some charts looking at the direct feedthrough from oil prices into pump prices and CPI across the region.

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Japan – upside risks to inflation

With the Iran War meaning both uncertainty and a negative terms of trade shock, the BOJ can justify some caution in moving rates. But the bank's detailed analysis last week was heavy on upside risks to inflation. Not addressing that means underlying upwards pressure on $JPY likely persists.

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East Asia Today

The main releases today were Korea and Taiwan PMIs. In terms of prices, the surveys show clear inflation pressure. For growth, the message is more mixed; firmer PMIs in part reflect supply disruptions. But exports still look strong, and in Taiwan, the non-mfg PMI has risen too.