This Year's Inflation Rate at 2.5%... Highest in 10 Years

Consumer Price Trends

[Sejong=Asia Economy Reporter Son Seon-hee] This year, consumer prices soared to the mid-2% range annually, marking the highest level in 10 years. In the second half of the year, international energy, grain, and raw material prices rose, compounded by global supply bottlenecks, causing sharp inflation not only in Korea but also in major countries such as the United States and the European Union (EU). Prices surged in the second half of this year, remaining above 3% throughout the fourth quarter. This trend is expected to continue until the first half of next year before stabilizing in the second half.

According to the 'December and Annual Consumer Price Trends' released by Statistics Korea on the 31st, the annual consumer price index rose 2.5% compared to last year. This is the largest increase in 10 years since 2011 (4.0%). The living cost index, which reflects the actual perceived inflation, also rose 3.2% compared to last year, marking the highest level since 2011 (4.4%).

Oh Woon-seon, Director of Economic Trend Statistics at Statistics Korea, said, "Prices of petroleum products, processed foods, industrial products, personal services, and agricultural, livestock, and fishery products rose, resulting in an annual increase in the mid-2% range. While there were demand-side factors, external factors such as rising international oil, grain, and raw material prices and supply chain disruptions played a significant role."

However, excluding temporary supply-side factors, the core inflation rate (excluding agricultural products and petroleum) also jumped 1.8%, surpassing the 1% range for the first time in three years since 2018 (1.2%). This is the highest increase in six years since 2015 (2.2%).

Regarding next year's inflation outlook, Director Oh said, "On an annual basis, it is expected to show a 'high in the first half, low in the second half' pattern and to be lower than this year." Lee Eok-won, First Vice Minister of Strategy and Finance, stated, "Stabilizing prices for low-income households will be the top policy priority next year."

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