5th July 2022 – (Seoul) South Korea’s headline inflation hit the highest in nearly 24 years in June owing to surging energy prices and higher eating-out costs, statistical office data showed Tuesday.
The consumer price index (CPI) stood at 108.22 in June, up 6.0 percent from the same month of last year, according to Statistics Korea. It was the highest growth in almost 24 years since November 1998.
The consumer price inflation gained speed this year, with 3.6 percent in January, 3.7 percent in February, 4.1 percent in March, 4.8 percent in April and 5.4 percent in May respectively.
The runaway inflation was driven by soaring global commodity prices amid the continued supply chain disruptions and geopolitical risks in Europe.
Pent-up demand, caused by the lifting of all the anti-COVID-19 measures except an indoor mask mandate, boosted services prices, especially eating-out costs, as well as farm goods prices.
The inflation exceeded the Bank of Korea (BOK)’s mid-term inflation target of 2 percent for 15 straight months.
To curb the surging inflation, the BOK has raised its policy rate by 25 basis points five times since August last year.
The central bank revised up this year’s inflation outlook to 4.5 percent in May from the prior estimate of 3.1 percent.
Price for industrial products, including oil products, jumped 9.3 percent in June from a year earlier, lifting the overall inflation by 3.24 percentage points.
Oil products price spiked 39.6 percent last month, marking the highest in nearly 24 years since October 1998. Prices for gasoline and diesel surged 31.4 percent and 50.7 percent each.
Processed food price gained 7.9 percent in June on expensive bread, after advancing 7.6 percent in May.
Private services price, including eating-out costs, increased 5.8 percent in June from a year earlier, raising the overall headline inflation by 1.78 percentage points. It was the highest gain since May 1998.
Expense for dining out jumped 8.0 percent last month, posting the highest in almost 30 years since October 1992.
Housing rent, including Jeonse and monthly rent, climbed 1.9 percent in June from a year earlier, and public services price added 0.7 percent.
Jeonse is South Korea’s unique contract between two households where a landlord grants a two-year residential right to a tenant, who in turn lends a certain amount of money, or deposit, to the landlord.
Price for agricultural, livestock and fishery products went up 4.8 percent in June on a yearly basis, after gaining 4.2 percent in the previous month.
Livestock products price jumped 10.3 percent on expensive feedstuff and higher import costs, while vegetable price picked up 6.0 percent last month.
Price for electricity, natural gas and tap water ascended 9.6 percent in June, marking the highest since relevant data began to be compiled in January 2010.
The livelihood items index, which gauges the price for daily necessities, rose 7.4 percent in June from a year earlier, logging the highest since November 1998.
The fresh food index, which measures the price for fish, shellfish, fruit and vegetable, was up 5.4 percent last month.
Demand-side inflation pressures mounted on pent-up demand, caused by the lifting of anti-virus measures.
Core consumer price, which excludes volatile agricultural and oil products, went up 4.4 percent in June, posting the highest since March 2009.
The OECD-method core price, which excludes volatile energy and food cost, climbed 3.9 percent in June after rising 3.4 percent in the prior month.