Korea's inflation slows to 2% in August, lowest in over three years

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Korea's inflation slows to 2% in August, lowest in over three years

Published: 03 Sep. 2024, 09:00 Updated: 03 Sep. 2024, 18:35

SHIN HA-NEE
[email protected]

Audio report: written by reporters, read by AI

A shopper looks at a shelf of Korean beef at a supermarket in Seoul on Monday. [YONHAP]

Korea’s inflation slowed to the lowest level in more than three years in August as the prices of agricultural and petroleum products stabilized.

The consumer price index, a key measure of inflation, rose 2 percent on year last month, according to data from Statistics Korea released Tuesday.

This yearly increase marked the lowest since the 1.9 percent recorded in March 2021.

Headline inflation remained below the 3 percent mark for the fifth consecutive month in August. After dropping below 3 percent for the first time in six months in January, it rebounded to 3.1 percent in February and March. The figure then fell to 2.9 percent in April, 2.7 percent in May and 2.4 percent in June before inching up to 2.6 percent due to monsoon rains in July.

On a monthly basis, consumer prices rose 0.4 percent.

The relative stabilization in the prices of fresh agricultural and petroleum products, which drove inflation in the previous month, led to a modest consumer price increase in August, according to the Bank of Korea. The central bank also cited a base effect from a steep surge in food and fuel prices last year for the mild inflation.

Agricultural, marine and livestock product prices rose 2.4 percent on year in August, compared to a 5.5 percent jump in the previous month. Compared to a month earlier, it rose 2.1 percent, mainly due to a 16.3 percent surge in vegetable prices driven by heat waves. However, the supply of newly harvested fruit led to a 0.7 percent decrease from the previous month, offsetting the overall increase. The prices of livestock products also dropped 1.5 percent from the preceding month.

The government announced on Aug. 28 that it would supply a record amount of high-demand food items ahead of the Chuseok holiday season with the goal of keeping prices below pre-pandemic levels.

Petroleum products rose 0.1 percent on year, stabilizing after a steep 8.4 percent increase the previous month following a decline in global crude prices, and remained unchanged from a month earlier.

Core inflation, which excludes volatile food and energy prices, inched down to 2.1 percent after remaining flat for three consecutive months at 2.2 percent.

The cost-of-living index, which tracks the price changes of 144 types of frequently purchased consumer goods and services, rose 2.1 percent, a significant deceleration from the previous month’s 3 percent on-year gain. This is the lowest increase in 13 months.

“If no additional shocks occur, such as abnormal weather conditions or global fuel price uncertainties, inflation is expected to remain at the lower 2 percent range, but the government will continue its commitment to guiding inflation toward a stabilization trend,” said the Ministry of Economy and Finance in a release.

Updated, Sept. 3: Added additional information about agricultural and petroleum product prices, and a comment from the Finance Ministry.

BY SHIN HA-NEE [[email protected]]