Korea’s June CPI up 1.5% on higher oil prices amid subdued demand

2018.07.03 13:47:24 | 2018.07.03 16:30:10

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South Korea’s consumer price added 1.5 percent on year in June primarily due to jump in imported oil prices whereas worsening domestic demand kept inflation below the 2 percent target for the ninth month in a row.

According to Statistics Korea on Tuesday, the country’s consumer price index (CPI) gained 1.5 percent from a year earlier and remained unchanged from the previous month. Little sign of pickup in demand-side inflation would further burden the Korean central bank in lifting the key interest rate from 1.5 percent amid widening gap with U.S. interest rates - at 1.75 percent-2.0 percent after the latest hike.

The benchmark three-year government bond yield ended Tuesday 1.5 basis points higher at 2.138 percent and the five-year bond 3.8 basis points higher at 2.378 percent.

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Prices of petroleum products soared 10.0 percent on year from higher international oil prices, pushing up the headline index by 0.44 percentage point. Prices of manufactured goods rose 1.8 percent and public transit fees leaped 4.1 percent due to the same reason. Higher oil prices influence prices in Korea as the country entirely relies on imports for oil and gas fuel.

Prices of agricultural, livestock and fishery products gained 1.8 percent on year, the slowest in five months. Agriculture products rose 6.7 percent on year, easing from 9.0 percent gain in May. Vegetable prices jumped 6.4 percent, but easing from the gain of 13.5 percent in the previous month as the government released rice and other stocks to help stabilize staple food prices.

The index for everyday expenses reflecting spending for staple food and utility fees grew 1.4 percent on year, unchanged from the previous month.

The core inflation excluding volatile oil and farm produces rose 1.2 percent on year and the CPI without food and energy, the standard by the Organization for Economic Cooperation and Development (OECD) was also up 1.2 percent.

By Lee Yu-sup and Cho Jeehyun

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