Korea’s inflation gains fastest in 4 months in August due to heatwave

[Photo by Yonhap]

South Korea’s inflation rate gained by the fastest pace in four months in August as prices of fruits increased sharply due to the heatwave and heavy rain.

According to Statistics Korea on Tuesday, the country’s consumer price index (CPI) gained 3.4 percent year over year to 112.33 in August in the steepest increase in four months since 3.7 percent in April.

Against a month ago, inflation rate was up 1.1 percentage points from 2.3 percent and the steepest growth since 1.1 percentage points in September in 2000.

Inflation hit a 25-month low at 2.3 percent in July after slowing since February but it reached above 3 percent level in three months.

Abnormal weather conditions such as heatwaves and heavy rains led prices of agricultural products to go up by 5.4 percent in August from a year earlier, pushing up overall prices by 0.26 percentage point.

Fruit prices, in particular, gained 13.1 percent from a year ago, the largest increase since 13.6 percent in January last year. Prices of apples rose 30.5 percent and peaches 23.8 percent.

Vegetable prices were down 1.1 percent from a year ago due to high prices following last year’s heatwaves. However, they were up 16.5 percent from a month earlier.

Prices of oil products fell 11 percent. The decline was smaller than 25.9 percent in the previous month with the fading of base effect that lasted through July.

Electricity, gas, and water prices rose 21.1 percent in August from a year ago, similar to the previous month.

Service prices were up 3 percent.

Personal services, in particular, gained 4.3 percent, the lowest level in 18 months since 4.3 percent in February 2022. Cost of dining out also rose by the lowest margin of 5.3 percent since 4.8 percent in December 2021.

Living necessaries price index, which is comprised of 144 items with high purchase frequency and high spending power, jumped 3.9 percent due to higher agricultural prices. It is the biggest increase since 4.4 percent in March this year.

The core CPI that excludes volatile food and energy factors remained unchanged at 3.3 percent in August.

“The core CPI that remained unchanged shows that inflation in August was triggered by temporary factors rather than a change in the underlying trend,” said Kim Bo-kyung, an official from Statistics Korea.