Inflation Hits 3% Range for Second Consecutive Month Due to Middle East Conflict; Largest Increase in 30 Months

Consumer prices rose at their fastest pace in 30 months last month.
The surge was driven by a sharp increase in petroleum product prices, which saw their largest jump in nearly four years due to rising international oil prices stemming from the conflict in the Middle East.
Agricultural prices also returned to an upward trend due to poor harvests, and the cost of living index saw its largest increase in 26 months.
According to the Consumer Price Trends for June released by the National Statistical Office today (July 2), the consumer price index stood at 119.99 (2020=100), up 3.2% from a year ago.
This marks the highest inflation rate since December 2023 (3.2%).
The consumer inflation rate expanded from 2.0% in January and February of this year to 2.2% in March and 2.6% in April, and has remained in the 3% range for two consecutive months, following a 3.1% rise in May.
The rise in international oil prices caused by the Middle East conflict pushed up consumer prices.
Petroleum product prices jumped 24.7%, contributing 0.93 percentage points (p) to the overall consumer price index.
The rate of increase for petroleum products was the highest since July 2022 (35.2%), during the early stages of the Russia-Ukraine war.
Gasoline prices rose 23.1% from the previous month, while diesel (33.7%) saw its largest jump since July 2022 (47.0%).
Kerosene (23.1%) also recorded its largest increase since February 2023 (27.1%), reflecting a broad rise in petroleum products.
The Ministry of Economy and Finance estimated that the price ceiling system for petroleum products helped lower the June inflation rate by 0.4 percentage points (p).
The ministry stated that without the price ceiling, the inflation rate would have reached 3.6%.
Lee Doo-won, an official from the Statistical Office's Economic Trends Statistics Division, explained, "While gasoline prices remained relatively stable due to the price ceiling, the slight rise in automotive LPG prices led to a marginal expansion in the overall petroleum product inflation rate."
He added, "As petroleum prices have been falling since June 27, we expect a potential decline in oil prices this month."
Among durable goods, prices for computers (22.2%) and large passenger cars (3.5%) saw relatively large increases due to price hikes for new products.
Consequently, industrial goods overall rose by 4.4%, pushing up the total inflation rate by 1.47 percentage points (p).
Prices for agricultural, livestock, and marine products rose 3.2%, contributing 0.24 percentage points (p) to the overall index.
Within this category, agricultural prices rose 1.1%.
Agricultural inflation, which had been in negative territory from February to May, turned positive for the first time in five months.
Increases in prices for green onions (37.1%) and rice (11.7%) were particularly notable.
Lee explained, "Shipments of green onions decreased due to reduced cultivation areas and delayed growth," adding that "overall vegetable prices shifted from a 4.9% decline last month to a 0.9% increase this month."
The inflation rate for livestock products also reached 6.2%, the highest since March of this year (6.2%).
Prices for domestic beef (7.5%), pork (4.5%), eggs (10.3%), and imported beef (6.8%) showed significant upward trends.
Marine product prices rose 3.7%.
The Statistical Office explained that the rise in exchange rates had an impact, noting that mackerel prices rose 2.4% compared to the previous month.
Service prices rose 2.6%, contributing 1.44 percentage points (p) to the overall consumer price index.
Personal service prices rose 3.4%, while public service prices increased by 1.6%.
Among public services, international airfares saw a notable increase of 28.2%.
Within personal services, dining out costs rose 2.6%.
The living cost index, which reflects perceived inflation based on frequently purchased items, rose 3.4%.
This is the largest increase in the living cost index since April 2024 (3.6%).
The living cost inflation rate expanded from 1.8% in February to 2.3% in March and 2.9% in April, and has remained in the 3% range for two consecutive months, following a 3.3% rise in May.
The living cost index is a key indicator monitored by the Bank of Korea, which has signaled potential interest rate hikes.
The fresh food index, which reflects grocery prices, rose 0.4%.
The core inflation index, excluding food and energy as defined by the OECD, rose 2.5%.
※ Please note: This article was translated by AI and may contain errors.