Bank of Korea: "Korea has no full lockdown or panic buying... Inflation rate slows compared to major countries"

Consumer Price Inflation Rates by Major Countries and Items

[Asia Economy Reporter Kim Eunbyeol] Regarding the 0.1% consumer price inflation rate recorded in April, the Bank of Korea stated, "Korea, where full lockdown measures were not implemented, experienced less supply chain disruption compared to major countries, and there was no hoarding of daily necessities, resulting in minimal upward pressure on commodity prices." It also evaluated that "government policies such as free high school education and reductions in individual consumption tax acted as additional downward factors on inflation."

On the 4th, the Price Trends Team of the Bank of Korea's Research Department said, "When comparing recent inflation trends in Korea and major countries, it appears that differences in the extent of COVID-19 spread and corresponding lockdown measures, in addition to global common factors such as the decline in international oil prices and global economic slowdown, are influencing the situation."

According to the consumer price trends announced by Statistics Korea on the same day, the consumer price index last month was 104.95 (2015=100), up 0.1% year-on-year. This is the lowest level in six months since October last year (0.0%). Compared to the previous month (1.0%), it fell by 0.9 percentage points.

However, when compared to the consumer price inflation rates of Germany (0.8%), France (0.5%), and the United States in March (1.5%), Korea's inflation rate was lower, which was attributed to differences in lockdown measures and hoarding behavior. The Bank of Korea explained, "Even in major countries, consumer price inflation rates have significantly declined due to the sharp drop in international oil prices and the slowdown in service prices caused by the spread of COVID-19," but added, "Comparing recent inflation trends, it seems that differences in the extent of COVID-19 spread and corresponding lockdown measures are influencing the situation."

It added that during the process of easing COVID-19 spread earlier than in major countries, promotional discounts focused on certain items also acted as a factor slowing down the inflation rate.

Photo by Asia Economy DB

Meanwhile, the Bank of Korea cited the following reasons for the decline in consumer price inflation in April: ▲ the sharp drop in international oil prices ▲ the slowdown in service demand ▲ the expanded implementation of free high school education. The average monthly price of Dubai crude oil fell from $64 per barrel in January to $55 in February, $34 in March, and $23 last month.

With social distancing and avoidance of face-to-face contact, demand for personal services such as travel, accommodation, and dining out contracted, while the price increase of industrial products (excluding petroleum products) slowed due to the reduction of individual consumption tax on passenger cars (implemented in March) and discounts on clothing, among others.

The expansion of free high school education (covering tuition fees, textbooks, etc.) from the 3rd grade last September to the 2nd and 3rd grades starting in April also had an impact.

This content was produced with the assistance of AI translation services.