▲ Citizens shop at a traditional market in Seoul on the 1st. (Photo: Yonhap News)
South Korea's consumer price inflation rebounded to the 3% range last month for the first time in two months.
The uptick came despite a slowdown in petroleum price growth and a drop in prices for agricultural, livestock, and marine products, largely due to a base effect from last year when SK Telecom discounted mobile phone bills by 50%.
According to the Consumer Price Trends for August released by the Korea National Statistical Office today (the 2nd), the consumer price index stood at 120.05 (2020=100) last month, marking a 3.1% rise from a year earlier.
After recording 2.6% in April, 3.1% in May, and 3.2% in June due to the impact of the Middle East conflict, consumer inflation dipped to the 2% range at 2.8% in July, only to climb back to the 3% range last month.
Petroleum prices rose 14.2%, showing a smaller increase than in July (15.5%).
Their contribution to inflation was 0.54 percentage points (p), also down from July (0.60 percentage points).
This was due to the implementation of the ceiling price system for petroleum.
The government analyzed that had this system not been enforced, the consumer price inflation rate would have climbed by an additional 0.5 percentage points to reach 3.6%.
Looking at specific items, diesel rose 19.6%, gasoline 11.5%, and kerosene 19.7%.
Prices of agricultural, livestock, and marine products fell 2.6%.
This marks a shift from a 0.9% increase in July to a decline, pulling down overall inflation by 0.21 percentage points.
The Statistical Office explained that this was due to increased shipping volumes and government-supported discount events.
However, while vegetable prices fell 9.7% compared to a year ago, they rose 12.4% compared to the previous month.
This was driven by rising summer temperatures and increased demand during the holiday season.
Despite the slowdown in petroleum prices, the main factor behind consumer inflation staying in the 3% range was a sharp 26.7% surge in mobile phone service fees last month.
This was attributed to the base effect from a 21.0% drop in mobile phone fees recorded in the same month last year.
Following a hacking incident that triggered a massive exodus of subscribers, SK Telecom slashed communication fees by 50% for all of its more than 20 million subscribers for the entire month of August last year.
Lee Doo-won, Director General for Economic Trends Statistics at the National Statistical Office, explained, "The base effect from the mobile phone fee cuts is at around 0.58 percentage points, and excluding this, overall inflation would be at the 2.5% level."
In other words, had it not been for the base effect of mobile phone charges, overall consumer prices would have marked their lowest level since March (2.2%).
Influenced by the rise in mobile phone fees, the inflation rate for public services jumped significantly from 1.4% in July to 6.5% last month.
This is the largest increase in 25 years since August 2001 (7.2%).
Processed foods rose 1.5% last month, expanding their growth by 0.5 percentage points from the previous month.
The Statistical Office interpreted this as the sequential reflection of recent successive factory price hikes for processed foods such as bread, snacks, and noodles.
The living price index, which is composed of frequently purchased items to reflect perceived inflation, rose 3.2%.
The fresh food index, which represents grocery prices, dropped 6.7%.
This marks the largest drop in 4 years and 10 months since October 2021 (-7.8%).
The index excluding food and energy, a core inflation indicator based on OECD standards, rose 3.4%.
This is the highest increase in 3 years and 3 months since May 2023 (3.8%).
Director Lee explained, "This is also because of mobile phone fees, which expanded the upward breadth by 0.8 percentage points compared to last month. Because core inflation tracks fewer items than overall consumer prices, the base effect appears larger."
The index excluding agricultural products and petroleum rose 3.1%.
This is the highest increase since December 2023 (3.1%).
(Photo: Yonhap News)
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