Consumer prices rise by 3.4% y/y amid rising oil prices

소비자물가 7월 2.3%에서 8월 3.4% 상승폭 확대

Korea's inflation prospects are looking murky amid the presence of external factors including rising oil prices but quite a number of pundits believe the pace of consumer price hikes will slow.
Ahn Sung-jin reports.

Despite a relative slowdown this year, consumer prices in South Korea remain unstable amid continuing external uncertainties.
According to economics think-tank, the Korea Development Institute, on Friday, consumer prices in August saw an on-year increase of 3-point-4 percent.
This indicates improvement from January of this year when the on-year increase was 5-point-2 percent.
Though the inflation rate has been dropping on a monthly comparison, the rise in prices for energy and agricultural products has pushed last month's figure back up from 2-point-3 percent in July.
Weather conditions such as heatwaves and heavy rain largely attributed to the 2-point-7 percent on-year increase for agricultural products, particularly the increased cost of vegetables.
Oil prices rose as Russia and Saudi Arabia extended their oil production cuts through the end of this year, while expectations that there will be no further interest rate hikes in the U.S. through the end of 2023 also attributed to climbing oil prices.
These factors took their toll on domestic oil prices which jumped 11 percent on-year.
Prices for basic necessities including vegetables, processed food, and petroleum products were also affected, increasing 3-point-9 percent on year.
Despite global volatile factors that affect consumer prices, the inflation increases are expected to further slow down as improvement in consumer sentiment and semiconductor exports provides some optimism.
At a government meeting on Friday, finance minister Choo Kyung-ho emphasized that since core inflation, which excludes these volatile components is rather stable, the overall inflation for October is set to stabilize.
However, he also added that as concerns over soaring oil prices remain, caution is necessary.
The government may also extend fuel tax cuts if prices remain high.
Ahn Sung-jin, Arirang News.

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2023-09-15, 14:00 (KST)