Sharp Rise in Vegetable Prices... August Consumer Prices Up 0.7% (Comprehensive)

August Consumer Price Trends

Highest Increase Rate in 5 Months
Cabbage Soars 69%

(Photo) [Image source=Yonhap News]

[Sejong=Asia Economy Reporter Joo Sang-don] Last month, consumer prices rose by 0.7% compared to the previous year, marking the highest increase rate in five months. The prolonged rainy season, the longest on record, caused vegetable prices to surge, and the impact of rising food prices due to the novel coronavirus disease (COVID-19) was significant. With typhoons following the rainy season, the upward trend in vegetable prices is likely to continue for the time being.

According to the 'August Consumer Price Trends' released by Statistics Korea on the 2nd, the fresh food index rose 15.8% compared to the same month last year. This is the largest increase since January 2017 (15.9%).

Among fresh foods, fresh vegetables increased by 28.6%, fresh fishery products by 7.3%, and fresh fruits by 7.2%. The price increase rate for fresh vegetables is the highest since November 2016 (33.4%). In particular, cabbage jumped 69.8% compared to August last year. Sweet potatoes (56.9%), tomatoes (45.4%), and pumpkins (55.4%) also saw sharp price increases.

An Hyung-jun, Director of Economic Trend Statistics at Statistics Korea, explained, "Due to the previous heavy rains, production and shipment of vegetables decreased, causing prices to rise," and added, "Livestock products increased as home consumption rose due to social distancing, and consumption increased during the vacation season." Statistics Korea expects Typhoon No. 9 'Maysak' to further fuel the rise in vegetable prices. Director An said, "Past statistics show that the impact of a single factor like the rainy season does not last more than two months, but if natural disasters continue for several months, the effects are prolonged. The impact of the rainy season is expected to last until September, but depending on this typhoon, the price increase period may be extended."

With the sharp rise in vegetable prices, the consumer price index in August recorded 105.50 (2015=100), rising 0.7% compared to the same month last year. The increase rate is the highest in five months since March (1.0%). However, the low inflation rate in the 0% range has continued for five months since April this year (0.1%). To understand long-term trends, the 'core inflation index'?which excludes seasonal factors and temporary shocks such as agricultural products and petroleum?rose 0.8% compared to a year ago. Although this is the largest increase since January this year (0.9%), it has remained in the 0% range for 13 consecutive months since August 2019 (0.9%).

Statistics Korea cited the recent low inflation causes as ▲decline in petroleum prices due to international oil price drops ▲decrease in public service prices due to expanded support for high school tuition fees ▲slowdown in the rise of dining-out prices due to social distancing. Director An said, "Emergency disaster relief funds were 90% spent in May and June, causing prices of livestock products such as beef to rise," and added, "It was expected that dining-out prices would rise mainly in restaurants where disaster relief funds could be used, but this effect has been limited."

Meanwhile, last month, housing rents rose 0.3% compared to the same month last year. Jeonse (long-term deposit rental) and monthly rent increased by 0.4% and 0.2%, respectively. Jeonse recorded the largest increase since March 2019 (0.5%), and monthly rent since February 2017 (0.3%).

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