Inflation expectations in South Korea hit the highest level in about 10 years in June amid worries that prices are fast increasing due to high energy and commodity costs, a central bank report showed Wednesday.

Ordinary people expected consumer prices to rise 3.9 percent over the next year, the fastest pace since April 2012, according to the report from the Bank of Korea (BOK). The June figure was also higher than a 3.3 percent rise predicted the previous month.

Data on expected inflation is closely monitored, as a rise could prompt people to demand more wage hikes for fear of a fall in their purchasing power, which will eventually apply additional upward pressure on already-high inflation.

South Korea has been grappling with fast-rising prices, as rebounding demand from the pandemic and supply chain disruptions caused by the war in Ukraine sent energy and key commodity prices higher.

In May, the country's consumer prices, a major gauge of inflation, jumped 5.4 percent on-year, the fastest rise in almost 14 years and a pickup from a 4.8 percent spike the previous month.

Finance Minister Choo Kyung-ho earlier said consumer prices could rise 6 percent in June-August. Consumer price data for June will be released early next month.

To keep a lid on inflation, the BOK has hiked its policy interest rate five times since August last year, including a quarter percentage-point rise last month.

With inflation pressure mounting, market watchers expect the central bank to take aggressive monetary tightening down the road, including an unprecedented 0.5 percentage-point increase next month.

The BOK is set to hold its next rate-setting meeting on July 13. (Yonhap)