▲ A gas station in Seoul
The growth rate of consumer prices has dropped back to the 2% range for the first time in three months.
This is because the upward trend in petroleum prices, which had surged due to the Middle East conflict, slowed down following the implementation of a ceiling price system.
A slowdown in agricultural prices also had an impact.
According to the July Consumer Price Trends released by Statistics Korea today (the 4th), last month's consumer price index stood at 119.77 (2020=100), up 2.8% from a year earlier.
The consumer price inflation rate recorded 2.2% in March and 2.6% in April in the wake of the Middle East conflict, before rising 3.1% in May and 3.2% in June to stay in the 3% range for two consecutive months, and then returning to the 2% range last month.
International oil prices fell, and the government continued its ceiling price system on petroleum, which helped dampen the upward momentum of petroleum prices.
Petroleum prices rose 15.5% last month, narrowing their growth compared to June (24.7%).
The contribution to inflation was 0.60 percentage points (p), also shrinking from June (0.93 percentage points).
By item, diesel (33.7% to 21.5%) and gasoline (23.1% to 12.6%) showed smaller increases than in June.
Lee Doo-won, Director General for Economic Statistics at Statistics Korea, explained, "The upward momentum has slowed as the effects of the government's market stabilization policies, such as ceiling prices, have materialized alongside the effects of lower international oil prices and exchange rates."
The Ministry of Economy and Finance estimated that the petroleum ceiling price system had the effect of lowering last month's consumer price inflation rate by 0.3 percentage points.
The analysis suggests that without the ceiling price system, inflation last month would have reached 3.1%.
The slowdown in the price growth of agricultural, livestock, and fishery products also contributed to the return to the 2% range.
Prices of agricultural, livestock, and fishery products rose 0.9% last month.
This marks a significant contraction in the growth rate compared to June (3.2%).
Accordingly, the contribution to inflation also fell to 0.07 percentage points, lower than in June (0.24 percentage points).
In particular, agricultural product prices shifted downward by 2.2%.
By item, prices declined for napa cabbage (-18.4%), watermelon (-11.1%), spinach (-21.3%), cucumbers (-13.8%), pumpkins (-15.9%), and radishes (-10.8%).
However, prices increased for domestic beef (5.7%), rice (7.9%), imported beef (8.7%), eggs (7.5%), mackerel (7.0%), and green onions (18.3%).
Director Lee analyzed, "Although July and August typically see upward pressures due to severe heat, production and shipments generally increased last month. It appears that a higher number of agricultural and livestock discount events driven by government support compared to other months were reflected."
Meanwhile, durable goods prices saw an expanded increase, moving from 3.1% in June to 3.9% last month.
The contribution to inflation rose from 0.22 percentage points to 0.28 percentage points.
Computers and portable multimedia devices rose 25.1% and 22.5%, respectively, recording their highest increases on record.
They were affected by rising semiconductor prices and the launch of some new products.
Electric-powered vehicle prices rose 6.2% due to factory price hikes and the return of individual consumption taxes.
Personal service prices rose 3.5% due to increased travel demand during the vacation season.
The growth rate expanded compared to June (3.4%).
Overseas group travel expenses (20.0%) and other items increased.
International airline fares, classified as public service prices, recorded an increase of 21.7%, staying in the 20% range for two consecutive months.
However, the growth rate narrowed from the previous month (28.2%).
The living livelihood index, which focuses on frequently purchased items to reflect perceived inflation, rose 2.5%.
The fresh food index, which indicates dining-table inflation, fell 2.3%.
The OECD-standard core inflation indicator, excluding food and energy, rose 2.6%.
Affected by rising durable goods prices, it marked the largest increase since December 2023 (2.8%).
Director Lee said, "Since the Middle East conflict has not been resolved, we need to watch for the possibility of processed food price hikes driven by rising petroleum prices in the second half. Next month, there are temporary upward factors due to the base effect from mobile phone bill discounts in August of last year."
(Photo: Yonhap News)
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