Consumer prices gained 0.6 percent in April, mired in the zero territory for the fourth month and adding 0.5 percent in the first four months of the year – the weakest since inflation data was compiled in 1965.
According to the data released by Statistics Korea on Thursday, the nation’s consumer price index (CPI) in April rose 0.6 percent against the same month last year, the longest stay in the zero territory since August 2016.
The prolonged weak inflation could become another factor to back a market rationale for a rate cut, but Bank of Korea Governor Lee Ju-yeol continuously stressed that lowering benchmark rate is not an option right now because the economy could improve in the second quarter.
Prices petroleum products fell 5.5 percent on year, dragging down the headline inflation by 0.24 percentage point. Gasoline prices slipped 8.5 percent and diesel 2.8 percent. Prices of industrial goods edged down 0.1 percent due to the drop in oil prices. Prices of agricultural, livestock and fishery products were up 0.7 percent on year.
The statistics bureau said the biggest factor for the retreat in petroleum product prices was the cut in domestic fuel taxes, so the planned phase out of the tax cut starting next week is expected to lift the inflation by 0.1 to 0.15 percentage point next month.
The growth in service charges slowed down to 0.9 percent in April, further retreated from the 1.1 percent gain in the previous month, the data found.
The index for everyday expenses reflecting spending for stable food and utility fees gained 0.4 percent in April compared to the same month a year ago, with food prices up 1.5 percent. The fresh food index including vegetables, fruits and fish tumbled 2.7 percent.
The CPI without food and energy, the standard by the Organization for Economic Cooperation and Development (OECD), rose 0.7 percent in April from the previous year. Core inflation, which excludes volatile oil and agricultural product costs, grew 0.9 percent on year.
By Kim Tae-joon and Choi Mira
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]