Pinching Pennies: Inflation Bounces Back to 3% Range After Two Months

[Anchor]

Consumer inflation bounced back to the 3 percent range last month after two months. While the inflation rate appeared particularly high partly due to last year's large-scale telecommunications fee reductions, the price burden felt by ordinary citizens remains heavy.

Reporter Chae Heesun has the details.

[Reporter]

This is a food market that provides donated food and daily necessities to low-income residents.

Foot traffic here continues as prices keep rising.

[Lee Su-ok / Yangcheon-gu, Seoul: Most people take a lot of daily necessities. We have to save even a thousand won.]

The consumer price index last month rose 3.1 percent from a year earlier.

The consumer inflation rate recorded 3.2 percent in June and dropped to 2.8 percent in July, but has climbed back into the 3 percent range.

A major factor was the base effect from August of last year, when SK Telecom cut mobile phone bills by 50 percent as compensation for a personal data leak incident.

[Lee Doo-won / Director-General for Economic Trends Statistics at Korea Data Bureau: When we recalculate inflation by removing the base effect caused by the telecom carrier's fee reductions, it stands at roughly the 2.5 percent level.]

Although it is attributed to the base effect, the inflation burden on households is far from easy.

Petroleum product prices jumped 14.2 percent from a year ago, and processed foods rose 1.5 percent as factory-gate price hikes were reflected in consumer prices.

Agricultural, livestock, and fishery products declined compared to a year ago when prices were exceptionally high, but vegetables surged significantly by 12.4 percent compared to a month earlier.

Core inflation, which excludes volatile agricultural products and petroleum, rose 3.4 percent last month, and the living price index, which reflects perceived inflation, also rose 3.2 percent.

The Bank of Korea forecasted that this month's consumer inflation rate will likely be lower than last month due to the fading base effect of mobile phone bills, but expected the upward trend centering on core inflation items to continue.

[Yang Jun-seok / Professor, Department of Economics, Catholic University of Korea: The upward trend in manufactured goods prices has not ended yet. With the war in Iran restarting, oil prices are likely to rise again, and the possibility of additional inflation is currently quite high.]

The upward trend in prices inevitably places a heavier burden on ordinary citizens, especially low-income households.

The government plans to supply a record-breaking 180,000 tons of Chuseok holiday staple goods and support 100 billion won in discounts on agricultural, livestock, and fishery products.

(Photo: Yonhap News)
(Reported by Lee Jae-young | Video by Lee Sang-min | Graphics by Cho Soo-in)
※ Please note: This article was translated by AI and may contain errors.