Fuel prices are displayed at a petrol station in Seocho District, southern Seoul, on July 2.YONHAP
Consumer prices rose 3.2 percent on year in June, the fastest pace in two and a half years, as the war in Iran drove up oil prices and poor summer harvests lifted food costs.
It was the second straight month that consumer prices rose more than 3 percent from a year earlier, intensifying concerns about the cost-of-living burden on vulnerable households, an issue the Bank of Korea flagged on Thursday.
The consumer price index, benchmarked to 100 in 2020, reached 119.99 in June, up 3.2 percent from a year earlier, the Ministry of Data and Statistics said Thursday. It was the sharpest increase since December 2023, when prices also rose 3.2 percent. Inflation has accelerated through the year, rising 2 percent in January and February, 2.2 percent in March, 2.6 percent in April, 3.1 percent in May and 3.2 percent in June.
The main driver was fuel. Petroleum prices soared by 24.7 percent last month as instability in the Middle East lifted global crude prices. That single category added 0.93 percentage points to the overall inflation rate. It was the steepest jump in fuel prices since July 2022, when they rose by 35.2 percent.
The Ministry of Finance and Economy estimated that its fuel price cap held June inflation down by 0.4 percentage points, and that the rate would have reached 3.6 percent without it.
"I think oil prices will fall in July," said Lee Doo-won, a director general for economic statistics at the Data Ministry. "But for overall prices, we need to keep watching things like farm, livestock and fishery products and computer-related durable goods."
Farm, livestock and fishery prices rose 3.2 percent and added 0.24 percentage points to overall inflation. Livestock prices climbed 6.2 percent, the fastest since March, led by domestic beef at 7.5 percent and eggs at 10.3 percent. Fishery prices rose 3.7 percent, with mackerel up 2.5 percent, partly because of the weaker won. Poor harvests also sent produce prices higher: green onions jumped 37.1 percent and rice rose 11.7 percent. As a result, farm-product prices rose 1.1 percent, their first increase in five months.
Produce is seen at a supermarket in Seoul on July 2.YONHAP
A separate index of frequently purchased goods, seen as a closer gauge of the inflation households actually feel, rose 3.4 percent, the sharpest since April 2024 and its second straight month above 3 percent. The Bank of Korea, which sets the country's benchmark interest rate, has recently focused on that figure.
"Cost-of-living inflation is continuing at a high level in the mid-3 percent range, and the cost-of-living burden on vulnerable groups is heavy," Bank of Korea Deputy Gov. Lee Ji-ho said at a price review meeting Thursday. "We will monitor price conditions with vigilance."
To hold inflation below 3 percent in the second half of the year, the government will run its largest-ever discount program for farm, livestock and fishery goods, worth 350 billion won ($225 million), from July through August. It also plans to import 200 million more eggs.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
