October Consumer Prices Surpass 3%... Highest in 10 Years

Statistics Korea Consumer Price Trends

[Sejong=Asia Economy Reporter Son Seon-hee] Last month, the consumer price inflation rate reached its highest level in over 10 years. Prices of items closely related to daily life, such as fuel, rent, and electricity, all rose simultaneously due to the base effect from telecommunications fee support, causing inflation to surge above 3%. Considering the ongoing supply chain bottlenecks, the government does not rule out the possibility of further price increases. Accordingly, the inflation rate for this year is expected to reach up to 2.3%.

According to the 'October Consumer Price Trends' released by Statistics Korea on the 2nd, the consumer price index last month recorded 108.97 (based on 2015=100), rising 3.2% compared to the same month last year. This is the largest increase in 9 years and 9 months since January 2012 (3.3%).

By item, the petroleum product inflation rate reached 27.3%, the highest since August 2008. Gasoline (26.5%), diesel (30.7%), and automotive LPG (27.2%) all increased. Processed foods, including bread (6.0%), also rose by 3.1%.

The living cost index, which reflects the actual perceived inflation by covering 141 items with high purchase frequency and expenditure share such as daily necessities, rose 4.6% last month. This is the highest figure in 10 years and 2 months since August 2011 (5.2%). The core inflation rate (excluding agricultural products and petroleum) also rose 2.8%, marking the highest level since January 2012.

The sharp increase in the consumer price index, which had been in the 2% range since April, was largely due to the base effect. In October last year, the government supported telecommunications fees of 20,000 KRW per person for those aged 16-34 and 65 and older, which had lowered the inflation rate (0.1%). With the end of this support, the inflation rate showed a significant rise.

Recently, the strong prices of raw materials have also pushed up consumer prices. The recovery in consumption and global supply chain disruptions have overlapped, significantly increasing logistics-related costs. International oil prices are also exceeding $80 per barrel.

Oh Un-seon, Director of Economic Trend Statistics at Statistics Korea, said, "While the prices of industrial products such as petroleum and processed foods and personal services continued to rise, the base effect from last October's telecommunications fee support caused a larger increase in public service prices."

With inflation surpassing 3%, the government's prediction that prices would stabilize in the second half of the year was completely off. Lee Eok-won, First Vice Minister of Strategy and Finance, said, "Upward factors such as rising international oil prices, base effects in agricultural, livestock, fishery products, and personal services remain, so uncertainty is still high. Supply disruptions may also last longer than expected, so we will concentrate efforts across ministries to stabilize the economy for ordinary citizens and control inflation."

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