Inflation Stays in the 2% Range for 3 Months... "Economic Recovery to Push Prices Higher in the Second Half" (Summary)

June Consumer Price Inflation Rises 2.4%... Led by Increases in Agricultural, Livestock, Fishery Products and Petroleum Products

Citizens shopping at a large supermarket in Seoul on the 6th amid growing concerns over rising grocery prices due to instability in the supply and demand of agricultural and livestock products. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Jang Sehee] Last month, consumer prices rose 2.4% compared to the same month last year, marking a three-month streak of increases in the 2% range. Price hikes in agricultural, livestock, and fishery products, petroleum products, and personal services continued to drive overall inflation. There are concerns that if the domestic economy recovers faster in the second half of the year, the rate of price increases could accelerate further.

According to the 'June 2021 Consumer Price Trends' released by Statistics Korea on the 2nd, the Consumer Price Index stood at 107.39 (2015=100), up 2.4% from the same month last year. This is the first time since September to November 2018 that a three-month consecutive increase in the 2% range has been recorded. With prices rising sharply this year, the consumer price inflation rate for the second quarter (2.5%) was also the highest since the first quarter of 2012 (3.0%).

In June, prices of industrial products (2.7%), services (1.6%), and agricultural, livestock, and fishery products (10.4%) led the overall increase. Agricultural, livestock, and fishery products rose 10.4%, a smaller increase than the previous month (12.1%), but maintained double-digit growth for six consecutive months. In particular, eggs (54.9%), garlic (48.7%), and red pepper powder (35.0%) saw significant price increases. Diesel and gasoline rose 22.4% and 19.8%, respectively, pushing industrial products up by 2.7%.

Public services fell by 0.6%, while personal services rose by 2.5%. Jeonse (long-term lease) and monthly rent increased by 1.9% and 0.8%, respectively. The core inflation rate (excluding agricultural products and petroleum) rose 1.5%, marking four consecutive months of increases in the 1% range. Although the government noted a slight month-on-month decline, it plans to closely monitor the situation in the second half of the year.

Lee Eokwon, First Vice Minister of Strategy and Finance, presiding over the policy review meeting that day, stated, "In the second half of the year, supply-side inflationary pressures are expected to ease somewhat due to the base effect, with fluctuations around 2%. However, upward risks such as weather conditions and rising international oil prices still exist, so we will strengthen proactive response efforts."

Professor Lee Inho of Seoul National University’s Department of Economics said, "If the global economic recovery and improvement in trade conditions materialize, oil prices will rise, which will bring overall inflationary pressure." He also predicted, "The supplementary budget of 33 trillion won will further increase inflationary pressure."

Meanwhile, following the revision of consumer price items, 14 new items including masks, avocados, and rice noodles will be added to the consumer price survey, while briquettes and school meal costs will be excluded. Statistics Korea plans to revise the consumer price index base year from 2015 to 2020 and announce it on December 22.

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