Korea’s consumer price inflation drops to 2% range

[Photo by Yonhap]

South Korea’s consumer price inflation fell to the 2 percent range for the first time in six months, continuing a slowdown, while prices of agricultural products continued to soar.

According to the consumer price data for January 2024 released by Statistics Korea on Friday, the consumer price index rose by 2.8 percent to 113.15, compared to the same month in 2023. The index is based on the 2020 figure as 100.

The consumer price inflation rate rose from 2.4 percent in July 2023 to 3.4 percent in August and continued at 3 percent range since, with 3.7 percent in September, 3.8 percent in October, 3.3 percent in November, and 3.2 percent in December for five consecutive months before returning to the 2 percent range in January.

The slowdown in the inflationary trend that began in November also continued. The largest contributor was petroleum, which fell by 5 percent from a year ago, pulling down the overall prices by 0.21 percentage points.

On the other hand, agricultural products rose by 15.4 percent, pushing up the inflation rate by 0.59 percentage points. This marks the second consecutive month of double-digit increases following the 15.7 percent rise recorded in December 2023.

Dining-out prices also rose by 4.3 percent compared to the same month in 2023, contributing 0.60 percentage points to inflation. But the increase itself was the lowest since November 2021 when it rose by 4.1 percent.

“The freeze on electricity rates and the slowdown in the increase in personal service prices led to a slowdown in the overall inflation rate,” according to Statistics Korea.

The core inflation, which excludes agricultural and petroleum products, rose by 2.6 percent compared to the same month in 2023, the lowest increase in 26 months since November 2021.

The OECD-style core inflation index, which excludes food and energy, rose by 2.5 percent, the lowest level in 25 months since it rose by 2.2 percent in December 2021.

The everyday essentials price index, the sub-index of consumer price index comprising frequently purchased items closely linked to perceived inflation, continued its slowdown trend, rising by 3.4 percent. This follows a trajectory from 4.5 percent in October 2023 to 3.9 percent in November and 3.7 percent in December.

Fruits and vegetables, which have been identified as the main culprits of recent price increases, still recorded high inflation rates. The fresh food index, which consists of items such as fresh fish, vegetables, and fruits that are subject to significant price fluctuations depending on weather conditions and seasons, rose by 14.4 percent.

Fresh fruits rose by 28.5 percent, recording the highest increase since January 2011 when the figure stood at 31.9 percent. Fresh vegetables and fresh fish also increased by 8.9 percent and 2 percent respectively.

“The poor harvest of apples and pears in 2023, combined with high demand for tangerines, kept fruit prices up for several months, and factors such as climate still remain,” Statistics Korea said.