S. Korea’s CPI in mid 2% for 3rd month, Q3 strongest in nine years

2021.10.06 09:54:15 | 2021.10.06 15:16:21

[Graphics by Song Ji-yoon]이미지 확대

[Graphics by Song Ji-yoon]

South Korean inflation has stayed above policy target of 2 percent for the sixth straight month on higher prices across the board from food to commodities to average at 2.6 percent in the third quarter, the strongest since the last peak of 2012.

According to Statistics Korea on Wednesday, the country’s consumer price index (CPI) added 2.5 percent from a year ago to 108.83 in September, a tad eased from 2.6 percent in July and August.

The CPI has been above the 2 percent targets since April, the longest streak after between August 2009 and June 2012.

The Bank of Korea during the last monetary policy meeting raised the policy rate from a record low of 0.50 percent to 0.75 percent amid signs of inflationary buildup.

In the July-September period, the headline inflation reached 2.6 percent, the highest since 3 percent in the first quarter of 2012.

Prices of agricultural, livestock, and fishery products soared 3.7 percent in September from a year ago. The growth slowed from double digits in the first half of this year and 9.6 percent in July and 7.8 percent in August.

Prices of eggs jumped 43.4 percent, lettuce 35.3 percent, garlic 16.4 percent, and pork 16.4 percent, data showed. Prices of radish, however, fell 44.7 percent and cabbage 40.3 percent.

Prices of industrial goods gained 3.4 percent, the highest since 3.5 percent in May, 2012. Prices of processed foods jumped 2.5 percent on higher oil and milk prices, and petroleum 22 percent.

Prices of diesel gained 23.8 percent, gasoline 20.8 percent, ramyun 9.8 percent, and bread 5.9 percent.

Prices of services jumped 1.9 percent in September from a year ago. Prices of public service gained 0.1 percent while those of individual service 2.7 percent and housing 1.7 percent.

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In individual service sector, prices of insurance service were up 9.6 percent and housing management fee 4.6 percent.

In housing, jeonse, or lump-sum long-term lease price, increased 2.4 percent, the highest since 2.6 percent in November, 2017. Monthly rent price gained 0.8 percent.

Electricity, water, and gas prices remained unchanged from last year.

Living necessaries price index jumped 3.1 percent from a year ago while fresh food price index fell 2.5 percent.

Eo Woon-sun, an official at Statistics Korea, said that prices of individual services, agricultural, livestock, and fishery products, and petroleum had so far led acceleration in consumer prices but in September growth came on higher prices of processed foods.

The official added that a slowdown in the increase in agricultural, livestock, and fishery prices is a downward factor but there are more upward elements.

“Personal service prices are likely to continue to gain on consumer sentiment rebound,” Eo said. “Prices of processed food and industrial goods are likely to go up on higher international oil and milk prices, on top of higher electricity cost.”

The Bank of Korea raised this year’s inflation outlook to 2.1 percent from 1.8 percent. But many think inflationary pressure to strengthen, given the volatility in food and commodity prices amidst power crunch in China and elsewhere.

Some are betting on back-to-back hike move in next week’s BOK rate-setting meeting as preemptive move against inflationary buildup.

Bond prices crashed.

The yield on 10-year government bond jumped 4.4 basis points to 2.335 percent, and the three-year government yield 2.6 basis points to 1.676 percent by midday.

By Lee Eun-joo

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]