Despite Four Months of Sub-1% Low Inflation... Food Prices Soar Amid Longest Jangma Season (Comprehensive)

Statistics Korea, July Consumer Price Trends

Consumer Price Inflation Rate 0.3%
Fresh Food Inflation Rate 4.3% → 8.4%
Cabbage 35.7%↑ · Pork 14.3%↑
Vegetable and Meat Price Inflation Rate Highest in 20 Months

(Photo for reference)

[Sejong=Asia Economy Reporter Ju Sang-don] Due to the impact of the novel coronavirus disease (COVID-19), the consumer price index has not risen above 0% for four consecutive months. Despite the low inflation trend, prices of vegetables and meat have recorded the highest increase in 1 year and 8 months, causing a sharp rise in food prices.

According to the consumer price trend for July announced by Statistics Korea on the 4th, the consumer price index was 104.86 (2015=100), up 0.3% compared to the same month last year.

The consumer price inflation rate, which had been below 1% for 12 consecutive months last year, recorded 1% levels from January to March this year. However, as the impact of COVID-19 began to be reflected, it dropped to 0.1% in April, -0.3% in May, and remained flat at 0% in June. Although there was a slight increase again two months after April, it still did not escape the low inflation trend of the 0% range.

An Hyeong-jun, Economic Trend Statistics Officer at Statistics Korea, explained, "The reasons for the continued low inflation include the decline in prices of public services such as high school and kindergarten tuition fees, the drop in petroleum and city gas prices due to the fall in international oil prices, and the limited increase in dining-out prices due to COVID-19. On the other hand, due to recent monsoon rains, vegetable shipments decreased, and the base effect from July last year when prices were low due to good harvests contributed to the rise in vegetable prices."

In fact, petroleum prices in July were 10.2% lower than the same month last year. Although the decline narrowed compared to May (-18.7%) and June (-15.4%), it is still affected by the fall in international oil prices. City gas prices, which rose 3.6% in June, fell 10.4% in July, as they are linked to international oil prices. Also, public service prices fell 1.9% due to a 67.9% drop in high school tuition fees. Dining-out prices rose only 0.6% compared to the same month last year, the same as in June. Dining-out prices had increased by 1.9% in June and 1.8% in July last year.

On the other hand, the fresh food index, which is calculated from 50 items including fresh fish and seafood, fresh vegetables, and fresh fruits that have large price fluctuations depending on seasonal and weather conditions, rose from 4.3% in June to 8.4% compared to the same month last year. This is the largest increase since November 2018 (10.5%). In particular, fresh vegetable prices rose 16.5%. Prices of cabbage (35.7%), sweet potatoes (37.0%), onions (39.9%), and lettuce (35.9%) increased significantly. Meat prices continued their sharp rise. Pork rose 14.3% and domestic beef 9.8% compared to a year ago. Accordingly, agricultural and livestock products as a whole rose 6.4%, the highest inflation rate in 1 year and 8 months since November 2018 (7.6%).

Among the total 460 items, the living cost index, calculated from 141 items that are frequently purchased and have a large expenditure share and thus are sensitive to price changes, showed no change compared to the same month last year. This is because the 2.8% increase in food prices, including vegetables and agricultural, livestock, and fishery products, was offset by a 4.5% decrease in non-food items such as electricity, water, and gas.

Officer An said, "Prices are a lagging indicator and often reflect changes with a delay of 3 to 6 months. We need to observe the situation a bit more to see future price trends."

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