'Remove Briquettes, Add Masks' Consumer Price Index Revised for the First Time in 5 Years... 2.4% Increase by November

[Sejong=Asia Economy Reporter Son Seon-hee] The government has revamped the Consumer Price Index (CPI) for the first time in five years to realistically reflect price trends. Items with increased consumer expenditure shares, such as masks, dishwashers, and clothes dryers, have been added, while items that have virtually disappeared, like briquettes, have been excluded from the CPI.

With the base year of the CPI changing from 2015 to 2020, the cumulative CPI inflation rate up to last month following this revision was 2.4%. This represents a 0.1 percentage point increase compared to the pre-revision index (2.3%).

On the 22nd, Statistics Korea released the "Results of the 2020 Base Consumer Price Index Revision." The CPI revision is conducted every five years to update survey items and weights in response to changes in the economic and social structure and household consumption patterns.

Following this revision, 14 representative items with increased consumer expenditure shares have been added to the CPI, including food items such as shrimp, cherries, mangoes, and avocados, as well as masks, dishwashers, clothes dryers, and electric-powered vehicles. Conversely, items with reduced consumption shares, such as briquettes and cameras, and items related to free education and free school meals, such as high school tuition fees, have been excluded.

The CPI inflation rate for this year, reflecting these changes in representative items, stands at 2.4%, which is 0.1 percentage points higher than the 2.3% rate based on 2015.

Oh Un-seon, Director of Economic Trend Statistics at Statistics Korea, stated, "The exclusion of items related to free education and free school meals, such as high school tuition fees and school meal costs, contributed to widening the inflation rate. On the other hand, price declines in newly added items like masks and clothes dryers, the transition of seasonal items to year-round surveys, and changes in weighting patterns contributed to narrowing the inflation rate."

The recent trend of increasing online consumption was also reflected in this CPI revision. Statistics Korea announced that the number of online transaction price survey items was expanded from 99 to 112, an increase of 13 items.

Meanwhile, despite calls over the past five years to include owner-occupied housing costs in the CPI due to soaring housing prices, this revision did not incorporate them.

Director Oh said, "The related concerns emerged almost at the end of the revision process, so it was not possible to consider them during this revision," adding, "Although the index including owner-occupied housing costs is not the main indicator, it is being compiled as a supplementary indicator."

However, he explained, "Housing prices are largely influenced by location factors (such as the area) rather than the building service itself. Therefore, houses are regarded as capital goods rather than consumption expenditure targets, and thus, fully including housing prices in the CPI is unlikely, even in overseas cases."

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