Korea¡¯s inflation ends 2020 up 0.5%, second year in near flat range

South Korea¡¯s inflation in December inched up 0.5 percent, closing the year in zero territory for two years in a row.

The consumer price index (CPI) added 0.5 percent in December from a year earlier and 0.2 percent from the previous month, Statistics Korea said Thursday.

The annual inflation for 2020 averaged 0.5 percent, far off the 2 percent target. This comes after the 0.4 percent inflation in 2019, marking the first time in the country's history for consumer prices to stay nearly stagnant for two consecutive years.

Korea had experienced zero-range annual inflation on just four occasions, the most recent case being in the wake of the Asian financial crisis when inflation in 1999 averaged 0.8 percent.

Soft global crude prices pushed down the prices of petroleum goods, while costs of dining out and leisure activities remained weak due to social distancing, Statistics Korea said.

Agricultural, livestock and fishery prices jumped 6.7 percent this year as the record-long rainy season pushed up fresh produce prices. This was well above the average 3.2 percent price gain seen in the previous 10 years.

Service charges edged up 0.3 percent from the previous year. Private service costs gained 1.2 percent, rising by the slowest pace in eight years. Public service costs dropped by a record 1.9 percent on Covid-19 relief and increased state support in the education sector.

Industrial product prices fell 0.2 percent and utility prices dropped 1.4 percent.

The CPI minus food and energy factors, the standard by the Organization for Economic Cooperation and Development (OECD), rose 0.4 percent in 2020, down from the previous year¡¯s 0.7 percent.

Core inflation, excluding volatile agricultural product and oil prices, gained 0.7 percent, the lowest since 1999 when the country was still reeling from the financial crisis.

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