June 29, 2022

South Korea recorded a sharp increase in consumer prices in November over surging energy costs and high prices of farm products, thus underscoring a build-up in inflationary pressure amid economic recovery.

According to the data compiled by Statistics Korea, the country’s consumer prices rose 3.7 percent in the reporting month from a year earlier, accelerating from a 3.2 percent on-year gain in October.

While consumer inflation also rose 0.4 percent in November from a month ago.

Consumer price summary –

• As oil prices surged amid the global economic recovery, prices of petroleum products in November rose 35.5 percent on-year.
• Prices of industrial products rose 3.5 percent, the fastest in 10 years.
• In the reporting month, South Korea’s benchmark, prices of Dubai crude, averaged $80.30 per barrel, up 36.9 percent from a year earlier.
• The country on Nov. 12 had to cut fuel taxes by a record 20 percent in order to curb inflationary pressure. This measure will be effective until April 30, 2022.
• Prices of agricultural, livestock and fishery products in November, rose 7.6 percent on-year, up from a 0.6 percent gain in October.
• The core inflation exclusive of volatile food and oil prices last month also rose 1.9 percent on-year.
• Prices of daily necessities, comprising of 141 items closely related to people’s daily lives, rose 5.2 percent on-year in November.

According to Finance Minister Hong Nam-ki, the consumer prices in December can be expected to grow at a slower pace than this month over oil prices showing signs of stabilization. He also mentioned that the impact of fuel tax cuts can be expected to be felt from this month.

The Bank of Korea (BOK) last month to tame inflation and curb household debt raised the policy rate by a quarter percentage point to 1 percent. While it also raised its 2021 inflation outlook to 2.3 percent from its earlier estimate of 2.1 percent. The central bank cited the growing demand-pull price pressure and rising oil prices for such an outlook.

The government in order to help ease the country’s inflationary pressure has planned to freeze natural gas bills for the remainder of this year. It will also seek to leave public utility charges unchanged until year-end.