South Korea’s consumer prices shot up 2.6 percent in August against a year ago in the fastest gain in more than five years due to food disruption from usual lengthy heat wave and frequent heavy rain on top of egg scare from pesticide contamination.
Inflation levels that have hovered around 2.0 percent throughout the year because of supply-end factors of higher oil and food prices accelerated as crop yield was ruined by a lengthy drought followed up by floods during the summer.
The government said Friday it will come up with measures to stabilize prices this month ahead of the Chuseok holiday - one of Korea’s biggest family gatherings - early October as prices are expected to strengthen as much of eggs were destroyed upon discovering overuse of pesticides in egg and chicken farms.
According to data released by Statistics Korea Friday, the nation’s consumer price index (CPI) gained 2.6 percent last month from a year ago, a figure last seen in April 2012.
The extraordinary jump in inflation won’t likely impact the monetary policy of the Bank of Korea which on Thursday kept the policy interest rate unchanged at a record-low of 1.25 percent for the 14th month in a row as the economic growth entirely hinged on exports while domestic demand stayed sluggish despite supplementary budgetary spending.
According to the Bank of Korea’s preliminary figures released on Friday, the gross domestic product gained 0.6 percent in the second quarter from the previous quarter, losing steam from the 1.1 percent gain in the first quarter.
Prices of vegetables jumped 22.5 percent as heavy rain followed a sizzling heat wave in August, pushing up the headline CPI by 0.37 percentage point. Prices of agricultural, livestock and fishery products rose 12.2 percent, bumping up the headline inflation by 0.96 percentage point.
Petroleum-related prices rose 3.6 percent, accelerating from 0.5 percent growth in July. Factory produce prices went up 1.0 percent as result, pushing up the CPI by 0.31 percentage point
Utility prices were up 8.0 percent against last summer when the government offered temporary relief to ease household burden on electricity bills.
Service charges including rent prices and personal and public service charges rose 1.8 percent, driving up the headline inflation by 1.04 percentage points.
Prices of grocery staples rose 3.7 percent, the biggest growth since 4.4 percent in December 2011. Food prices climbed 5.9 percent, and others 2.5 percent.
By Yoon Won-sup
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]