Consumer Prices Drop to 5% Range in August... Rising Trend Broken After 7 Months (Update)

Consumer Price Trends

[Asia Economy Sejong=Reporter Son Seonhee] Last month, the consumer price index (CPI) inflation rate fell to the 5% range, breaking the upward trend for the first time in seven months. The recent decline in international oil prices is analyzed to have had a decisive impact on the slowdown in the inflation rate. However, since external volatility remains high, there is cautious debate about whether prices have peaked.

According to the 'August Consumer Price Trends' released by Statistics Korea on the 2nd, the consumer price index last month was 108.62 (based on 2020=100), up 5.7% compared to the same month last year. This is 0.6 percentage points lower than the inflation rate in July (6.3%). It is the first time since January that the month-on-month inflation rate has slowed.

Oh Woonseon, Director of Economic Trend Statistics at Statistics Korea, explained, "Prices of industrial products such as petroleum products and processed foods, personal services, and agricultural, livestock, and fishery products continued to rise," adding, "However, the rise in petroleum prices significantly slowed, reducing the overall inflation rate by 0.6 percentage points."

Looking at individual items, prices of agricultural, livestock, and fishery products rose 7.0% compared to the same month last year. In particular, due to adverse weather conditions such as heavy rain damage last month, vegetable prices surged by 27.9%, pushing the overall agricultural product prices up by 10.4%. Livestock products rose by 3.7%, and fishery products increased by 3.2%.

During the same period, petroleum prices rose by 19.7%. Although this is still a high double-digit increase, it shows a relative slowdown compared to the previous trend when prices soared into the 30% range. The inflation rate is the lowest since February last year (19.4%). Additionally, prices for electricity, gas, and water rose by 15.7%.

Thanks to the decline in international oil prices, supply-side inflationary pressures have somewhat eased, while demand-side factors such as personal services maintained a high inflation rate. Last month, personal service prices rose by 6.1%, with the dining-out price index jumping 8.8%, marking the highest increase in about 30 years since October 1992 (8.8%).

The living cost index, which reflects perceived inflation, rose by 6.8%. The core inflation rate (excluding agricultural products and petroleum products), which shows the underlying trend of inflation, increased by 4.4%, slightly down from 4.5% in the previous month.

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