The central bank forecast inflation to fluctuate around three percent through the end of the year as the rate posted a 21-month low in the two-percent range in June.

At a meeting with officials on Tuesday, Bank of Korea(BOK) Deputy Governor Kim Woong said last month's inflation slowed under three percent as expected due largely to the base effect.

Amid a fall in oil product prices, inflation gradually slowed from three-point-seven percent in April to three-point-three percent in May, before dropping under three percent last month for the first time since September 2021.

With a slowdown in core inflation, which excludes volatile food and oil prices, to three-point-five percent in June amid cooling housing rental and service price increases, the BOK said the trend could surpass the previous forecast in the coming months.

The central bank has cited existing uncertainties stemming from developments in international oil prices, economic trends at home and abroad, and adjustments in public utility prices.