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RIYADH: South Korea’s inflation rose to a 24-year high in June, while Australia’s central bank increased the country’s interest rate for the third month in a row. 

Inflation in South Korea

South Korea’s inflation last month hit the highest since the Asian financial crisis more than two decades ago, adding to signs of building strains on the open, trade-dependent economy and fanning expectations of a big rate hike by the central bank.

Data showed on Tuesday the consumer price index grew a slightly faster-than-expected 6 percent in June over a year earlier — the highest since November 1998 — while other data showed foreign exchange reserves shrank by the most since late 2008.

Australia ups interest rates

Australia’s central bank on Tuesday raised interest rates for a third straight month and flagged more ahead as it struggles to contain surging inflation even at the risk of triggering an economic downturn.

Wrapping up its July policy meeting, the Reserve Bank of Australia lifted its cash rate by 50 basis points to 1.35 percent, marking 125 basis points of hikes since May and the fastest series of moves since 1994.

“The Board expects to take further steps in the process of normalizing monetary conditions in Australia over the months ahead,” said RBA Gov. Philip Lowe in a statement.

Japan’s service sector

Japan’s services sector activity expanded at the fastest pace in over eight years in June as the easing of coronavirus curbs boosted sentiment among businesses such as those in tourism.

The pick-up in activity is welcome news for a government betting on domestic demand to put the world’s third-largest economy firmly on a recovery track and help overcome production pressures on the country’s manufacturing industry.

The final au Jibun Bank Japan Services purchasing managers’ index rose to a seasonally adjusted 54, marking the fastest pace of expansion since October 2013.

That was stronger than May’s final 52.6 growth, though it remained below a 54.2 flash reading for June released last month.

Wages in Japan

Japan’s real wages extended a decline in May to post the biggest year-on-year drop in nearly two years, government data showed on Tuesday, as consumer inflation hovering near a seven-year-high outpaced nominal wage growth, reducing households’ spending power.

Higher living costs amid low-wage growth are likely to curb Japan’s consumption-led economic recovery from the coronavirus pandemic.

Inflation is also a top issue for voters in an upper house election on Sunday, although Prime Minister Fumio Kishida’s ruling party is likely to increase the number of seats it holds, according to an opinion poll published on Monday.

With input from Reuters