Consumer prices hit 25-month low in July

Korea’s consumer prices slowed for a sixth consecutive month in July to grow 2.3 percent on year, the lowest in 25 months, data released by Statistics Korea showed on Wednesday.

People shop for food at a discount supermarket in Seoul on Wednesday. Consumer prices rose 2.3 percent in July from a month earlier, showed Statistics Korea data on the same day, marking the slowest growth in 25 months. [NEWS1]

Korea’s consumer prices slowed for a sixth consecutive month in July to grow 2.3 percent on year, the lowest in 25 months, data released by Statistics Korea showed on Wednesday.

Consumer prices, a key inflation gauge, slowed from 2.7 percent in June due to lower oil prices.

“Inflation is slowly falling as prices for industrial products, electricity, gas and water and services slow,” said Kim Bo-kyung, a senior official at Statistics Korea. “A record low petroleum price contributed to the 2 percent range inflation in July.”

By sector, utility services, including electricity, gas and water, jumped 21.1 percent over the same period while the service industry grew 3.1 percent. Agro-fishery products rose 0.5 percent due to heavy rainfall that hit the nation in July.

Prices of industrial products remained steady in July, with diesel and gasoline plunging 33.4 percent and 22.8 percent, offsetting gains from bread and children's apparel that advanced 8.1 percent and 13.7 percent.

Prices of daily necessities, including 144 items closely related to consumers' daily lives, including food and clothing, increased 1.8 percent on year. The figure slowed from June's 2.3 percent gain.

The index climbed 0.1 percent on a monthly basis.

Core inflation, excluding volatile food and energy prices, slowed to 3.3 percent last month from 3.5 percent tallied a month earlier. The central bank projects inflation to rise back up from August.

“Consumer prices growth is forecast to rise back up from August as expected to fluctuate around 3 percent through the end of 2023,” Bank of Korea Deputy Gov. Kim Woong said in a meeting with the central bank officials in central Seoul on Wednesday. “Core inflation is expected to exceed the May figure amid a gradual slowdown.”

Core inflation in May was 3.9 percent, and the Bank of Korea in May forecasts the annual inflation for this year to reach 3.5 percent.

The central bank paused the interest rate hike last month for a fourth straight time at 3.5 percent after its last policy rate increase in January, citing inflation and risks remaining in the financial sector such as rising household debt.

The bank will maintain its tight stance on monetary policy, highlighting rate cuts will be discussed only when the Monetary Policy Board feels certain that inflation has sufficiently converged to the target 2 percent, according to central banker Rhee Chang-yong.

BY JIN MIN-JI [jin.minji@joongang.co.kr]