May Consumer Prices Down 0.3%... Negative for the First Time in 8 Months (Update)

[Asia Economy Reporter Kwangho Lee] Last month, the consumer price inflation rate turned negative (-) for the first time in eight months. The impact of 'social distancing' measures due to the spread of the novel coronavirus infection (COVID-19) reduced dining-out demand, and the plunge in international oil prices affected inflation.

According to the 'May Consumer Price Trends' released by Statistics Korea on the 2nd, the consumer price index last month was 104.71 (2015=100), down 0.3% compared to the same period last year. It fell 0.2% compared to the previous month. This is the first time consumer prices have recorded a negative rate since September last year (-0.4%).

The living cost index, which reflects perceived inflation focusing on 141 items with high purchase frequency and expenditure share, fell 0.7% compared to a year ago. This is the lowest figure in eight months since last September (-0.9%).

The fresh food index, which reflects prices of 50 items with significant price fluctuations due to weather conditions or seasons, rose 3.4% compared to a year ago.

The agricultural products and petroleum-excluded index (core inflation), which is compiled to identify long-term trends excluding seasonal factors or temporary shocks, rose 0.5% compared to the same period last year. It has remained in the 0% range for 10 consecutive months since last July (1.0%).

The OECD-standard core inflation index, excluding food and energy, rose 0.1% compared to a year ago.

An Hyung-jun, Economic Trend Statistics Commissioner at Statistics Korea, said, "The biggest cause of last month's consumer price decline was the sharp drop in petroleum prices due to the fall in international oil prices, and the price decline in public services due to policy support in the education sector also had an impact."

He added, "Since the cause of the price decline is more of a supply-side factor than a demand-side factor, it is inappropriate to judge it as deflation."

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