South Korea’s consumer price rose 2.1 percent in September on year, easing from a 2.6 percent gain in the previous month but hovering above the 2 percent inflation target for three months in a row primarily due to strong food prices from poor weather conditions.
Data released by Statistics Korea on Thursday showed that the nation’s consumer price index (CPI) climbed 2.1 percent from a year earlier as fresh food prices remained high. Supply stayed tight during the summer from the sizzling heat wave and frequent rainfall while demand has recently surged ahead of the week-long Chuseok holiday, one of the country’s biggest family gatherings, which begins October 3.
The headline inflation has accelerated in a pace of more than 2 percent since July. The last time it strengthened for three straight months was in June 2012. After the country’s underlying inflation stayed subdued since 2012 due to weakening growth potential and graying population, the Bank of Korea cut the three-year inflation target for 2016-2018 to “around 2 percent” from its long-held band of 2.5 percent to 3.5 percent.
The acceleration in inflation, however, won’t likely affect the monetary policy as the BOK has kept the benchmark interest rate at a record low of 1.25 percent since June last year because the spike was fueled by supply-end factors whereas domestic demand remained stubbornly depressed.
Petroleum-related prices shot up 6.1 percent due to a rise in global oil prices, the biggest jump since the 8.9 percent spike in May.
Prices of agricultural, livestock and fishery products rose 4.8 percent on year, pushing up the headline inflation by 0.41 percentage point, as people started getting ready for the Chuseok holiday. Prices were nevertheless high as they went against the unusual 43 percent jump in vegetable prices in September last year.
Fruit prices soared 21.5 percent, jumping by more than 20 percent since June.
Egg prices rose 24.4 percent on year, slightly cooling down from the 53.3 percent jump last month when eggs were pulled out of shops across the nation after they were found to have been contaminated from pesticide overuse.
Squid prices soared 63.7 percent, tomatoes 35.9 percent and onions 33.5 percent.
As a result, the fresh food index gained 6 percent year on year. Prices of grocery staples were also up 2.9 percent.
Food prices rose 3.1 percent and non-food prices 2.7 percent. The living necessaries index including rent gained 2.7 percent.
Service charges including rent prices and personal and public service charges were up 1.8 percent. Personal service charges gained 2.3 percent, driving up the headline inflation by 0.73 percentage point.
By Lee Seung-yoon
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]