South Korea's consumer price inflation fell back to the 2% range last month for the first time in three months.

This slowdown was driven by a moderated upward trend in petroleum prices, which had previously surged due to the impact of the Middle East war.

According to the July Consumer Price Trends report released by the Korea National Statistical Office today (August 4), the consumer price index stood at 119.77 (2020=100) last month, marking a 2.8% rise from a year earlier.

Following the fallout from the Middle East conflict, consumer price inflation recorded 2.2% in March and 2.6% in April, before hitting 3.1% in May and 3.2% in June to stay in the 3% range for two consecutive months, and finally returning to the 2% range last month.

The decline was driven by falling international oil prices and the government's continued implementation of a petroleum price ceiling system, which cooled the upward momentum of oil prices.

Petroleum prices rose 15.5% last month, narrowing their growth compared to June (24.7%).

The contribution to inflation stood at 0.60 percentage points, also shrinking from June (0.93 percentage points).

Looking at individual items, diesel (33.7% to 21.5%) and gasoline (23.1% to 12.6%) showed smaller increases compared to June.

The Ministry of Economy and Finance estimated that the petroleum price ceiling system had the effect of lowering July's consumer price inflation rate by 0.3 percentage points.

The analysis suggests that without the price ceiling system, inflation in July would have reached 3.1%.

The living price index, which focuses on frequently purchased items to reflect perceived inflation, rose 2.5%.

The fresh food index, which measures grocery prices, fell 2.3%.

The OECD-standard core inflation indicator, which excludes food and energy, rose 2.6%.

This marks the largest increase since December 2023 (2.8%).

(Photo: Yonhap News)