South Korea’s consumer prices in December gained 1.5 percent on year to end 2017 at an annualized growth rate of 1.9 percent, the fastest inflation rise in five years mostly due to higher fresh food and oil prices on the supply end.
According to data released by Statistics Korea Friday, the nation’s consumer price index (CPI) rose 1.5 percent in December from a year earlier, accelerating from a 1.3 percent gain in the previous month.
For full 2017, the annualized inflation rate was up 1.9 percent from a year earlier, near the central bank’s inflation target of 2.0 percent.
The Bank of Korea on Thursday projected the inflation to stay within its target level of 2.0 percent while the economy continues to grow at a steady pace of around 3.0 percent next year.
The annual inflation level fell to a historic low of 0.7 percent in 2015 but has been on a steady rise since it recovered to above 1.0 percent last year. The headline CPI has hovered mostly around 2.0 percent throughout this year driven by strong fresh food and oil prices.
For the full year, prices of agricultural, livestock and fishery products jumped 5.5 percent on year and pushed up the headline CPI by 0.85 percentage point. Fresh food prices stayed strong throughout the summer due to poor weather conditions, while egg prices soared due to avian flu that wrecked the poultry industry last winter.
Industrial goods including petroleum products climbed up 1.4 percent and lifted the headline inflation by 0.46 percentage point due to the spike in global oil prices.
Utilities fees dropped 1.4 percent on year as electricity bills were shaved. Service charges including rent prices and personal and public service charges rose 2.0 percent on year and drove up the headline index by 1.09 percentage points.
The index for everyday expenses reflecting spending for staple food and utility fees jumped 2.5 percent on year, the fastest in seven years. The fresh food index that includes vegetables, fruits and fish soared 6.2 percent. Fruit prices hiked 15.0 percent, but fresh vegetable prices fell 1.0 percent.
When excluding volatile oil and farm produces, the core inflation gained 1.5 percent from a year ago. The CPI without food and energy, the standard by the Organization for Economic Cooperation and Development (OECD), was up 1.5 percent.
By Lee Yoo-sup and Cho Jeehyun
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