Inflation Rate at 3.7%... 'Inflation Fear' Seen for the First Time in 10 Years

November Consumer Price Trends
Petroleum Products Up 35.5%, Largest Increase Since July 2008... Driving High Inflation

[Sejong=Asia Economy Reporter Son Seon-hee] Last month, consumer prices rose at the fastest pace in over a decade. After the inflation rate exceeded 3% in October, it surged even higher last month. The rise in international oil prices, along with increases in domestic major food and service prices, is expected to exacerbate the economic hardship faced by the public.

According to the 'November Consumer Price Trends' released by Statistics Korea on the 2nd, the consumer price index last month was 109.41 (based on 2015=100), up 3.7% compared to the same month last year. This is the largest increase in 9 years and 11 months since December 2011 (4.2%). It is also the first time since January and February 2012 that the inflation rate has remained in the 3% range for two consecutive months, following October's 3.2%.

The main driver of last month's inflation was the rise in petroleum prices due to the global high oil price trend. Petroleum prices increased by 35.5%, the highest since July 2008 (35.5%). Strong prices in personal services and agricultural, livestock, and fishery products also contributed to inflation. The living cost index, which reflects perceived inflation, rose by 5.2%, marking the largest increase since August 2011 (5.2%).

The government's prediction that prices would stabilize in the second half of the year was completely off the mark. In particular, when the inflation rate exceeded 3% in October, the government claimed it was due to the "base effect of communication fee support" and assured that "price stabilization measures such as the reduction of fuel tax from November would also impact prices." The government's target to keep inflation within the 2% range has effectively failed. With only one month left in the year, the cumulative inflation rate stands at 2.3%.

The Organisation for Economic Co-operation and Development (OECD) raised its forecast for South Korea's inflation rate this year by 0.2 percentage points from 2.2% to 2.4% in its 'World Economic Outlook' report released the day before.

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