Poor weather conditions - drought and floods - that ruined crop sent South Korea’s consumer prices 2.2 percent higher in July on year, running at the same five-year fast pace of March when inflation was driven by sharp hike in oil prices.
According to data released by Statistics Korea Tuesday, the nation’s consumer price index (CPI) gained 2.2 percent last month from a year earlier, hovering above or near the country’s inflation target of 2 percent since the beginning of the year.
The central bank and government forecast full-year inflation at 1.9 percent because of supply-end pressure.
Prices of agricultural, livestock and fishery products jumped 9.8 percent, pushing up the headline inflation by 0.39 percentage point. Vegetable price soared 10.1 percent on year due to lengthy hot summer weather and the spell of heavy rain in July.
Poultry and fishery prices edged up 8.1 percent and 5.7 percent, respectively, from a year-ago period, dragging up the overall CPI by 0.67 percentage point.
Utility prices were up 8.0 percent from a year ago when the electricity bills significantly dropped on the government’s one-time summer relief measure and bumped up the headline inflation by 0.29 percentage point.
Petroleum-related prices inched up 0.5 percent on year, softening from gains earlier in the year.
The core inflation excluding oil and farm produces rose 1.8 percent in July from a year earlier. The index had stayed around 1.5 percent until early this year but the gain accelerated due to the on-year rise in utility prices.
The CPI without food and energy, the standard by the Organization for Economic Cooperation and Development (OECD), increased 1.5 percent.
Service charges rose 1.9 percent on year as house rent prices gained 1.7 percent and personal service charges 2.4 percent against a year ago period.
The index for everyday expenses reflecting spending for staple food and utility fees accelerated 3.1 percent. The year-on-year gain is the largest since January 2012 with 3.1 percent. The hike is largely due to utility prices that sharply increased compared to the previous year, and the living necessaries inflation drops to between 2.4 and 2.5 percent when excluding the impact from utility prices, explained a Statistics Korea official.
Food prices climbed 5.0 percent and prices for living necessaries excluding food rose 2.1 percent. The living necessaries index including rent prices like jeonse - Korea’s traditional rent contract where tenants pay lump-sum deposit for usually two years - moved up 2.9 percent.
The fresh food index that includes vegetables, fruits and fish soared 12.3 percent to mark the largest on-year gain since November last year with 14.2 percent. Fruit prices hiked 20.0 percent and vegetable prices 10.3 percent due to the unusually hot and wet weather in July.
By Na Hyun-joon
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]