Consumer prices rose 5.6% last month from a year earlier. The inflation rate, which stood at 6.3% in July, slowed for two months in a row following August (5.7%). However, the rate of increase in the core price (price excluding agricultural products and petroleum), which shows the basic trend of prices, was 4.5% last month, up 0.1 percentage point from August. As a result, there are observations that ‘inflation has already peaked’, but on the other hand, there is also an objection that it is too early to make a decision.
According to the National Statistical Office on the 5th, consumer price inflation rose 5.6% in the month of last year. Compared to the previous month, it rose 0.3%. The consumer price inflation rate jumped from 3% in January and February to 4% in March and April, then rose to 5.4% in May, and recorded 6.0% and 6.3% in June and July, respectively. The inflation rate in July was the highest since November 1998 (6.8%) during the financial crisis. Then, in August and September, it fell to the 5% level again.
Eo Woon-seon, director of economic trend statistics at the National Statistical Office, said, “There is a possibility that (inflation) has passed the peak.” But there are also many factors of anxiety. First of all, the slowdown in inflation last month is largely due to the fall in international oil prices. As OPEC+, a consultative body between the Organization of the Petroleum Exporting Countries (OPEC) and Russia, is considering cutting production of more than 1 million barrels of crude oil a day, oil prices may rise again.
The rise in core inflation is also a factor of concern. Core prices are prices excluding food and energy, which are highly volatile due to seasonal factors or temporary shocks. It shows the basic trend of prices. The core inflation rate last month was 4.5%, but since June this year, it has been at the 4.4-4.5% level.
The core inflation rate remained in the 1~2% range until last year, and remained in the 3% range until April of this year. Lee Hwan-seok, Deputy Governor of the Bank of Korea, said on the 5th, “The consumer price inflation rate in September decreased slightly, but the core price continues to rise mainly for personal service items such as restaurants.” We will continue to rise,” he said.
The won-dollar exchange rate, which is maintained at 1,400 won, is also a variable. This is because the high exchange rate raises the price of imports. The increase in electricity and city gas rates is also a factor that puts pressure on prices. From this month, the government has decided to raise the electricity rate for housing by 7.4 won per kWh and the industrial electricity rate by up to 16.6 won per kWh, and also raise the gas rate by 2.7 won per megajoule (MJ). As a result, the government predicted that consumer prices would rise by 0.3 percentage points.
The rise in consumer prices last month was driven by industrial goods and personal services. Their contribution to inflation (compared to the same month of the previous year) was 2.32 percentage points and 1.95 percentage points, respectively. Among them, the personal service price rose 6.4% from the same month of the previous year, the highest since April 1998 (6.6%). Among personal services, the inflation rate for dining out was 9.0%. It is the highest in 30 years since July 1992 (9.0%). Prices of chicken (10.7%) and sashimi (9.6%) jumped significantly.
Reporter Do Byung-wook [email protected]