Hong Nam-ki: "Price Increase Due to Base Effect... Will Ease in Second Half of Year"

May Consumer Prices Up 2.6%... Largest Increase in 9 Years and 1 Month

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Hong Nam-ki, Deputy Prime Minister and Minister of Economy and Finance, stated regarding the 2.6% increase in consumer prices in May compared to a year ago that "this was driven by base effects and temporary supply shocks," adding, "such phenomena are expected to gradually resolve as we move into the second half of the year."

On the 2nd, Hong evaluated the May consumer price trends through his social media (SNS).

According to the consumer price trends announced by Statistics Korea on the same day, the consumer price index for May recorded 107.46 (2015=100), rising 2.6% compared to the same month last year. This is the highest increase since April 2012 (2.6%). After recording 1.1% in February this year, the increase has been in the 2% range for two consecutive months including last month.

Hong analyzed that the rise in consumer prices in May was due to the base effect. He said, "In May last year, due to the COVID-19 shock, international oil prices and petroleum product prices plummeted (-18.7%), resulting in a reflexive effect where the inflation rate recorded the lowest point of the year at -0.3%. Excluding the base effect, the month-on-month inflation rate was 0.1%, showing that the inflation trend, which had expanded due to AI outbreaks and cold waves earlier in the year, has recently stabilized."

He also explained that the sharp rise in prices of agricultural, livestock, fishery products, and petroleum products was "the same phenomenon as in April, when prices rose due to temporary supply shocks."

However, he added, "It is noteworthy that personal service prices, closely related to consumption, are gradually rising as consumption recovery trends appear in recent retail sales and service industry production."

Hong emphasized, "The government plans to respond with full force together with related ministries to prepare for the possibility of inflation risks materializing with a 'preparedness prevents trouble' attitude, to block excessive inflation expectations, and to stabilize living costs."

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