Worried About Rising Prices... Faces Downcast on Chuseok Amid Typhoon 'Hinnamno'

August Prices Up 5.7%... Inflation Pace Slightly Slows
Vegetable Prices Rise After Typhoon... Will Burden on Common People Increase?
Government "Concern Over Price Rise Due to Weather Deterioration... Focusing Policy Efforts for Stability"

On the 29th, when the government announced that it would manage the prices of major goods before Chuseok at the levels of one year ago and provide up to 4 million won to small business owners, citizens visited the Nonghyup Distribution Hanaro Mart Yangjae branch in Seocho-gu, Seoul, to do their shopping. Photo by Kang Jin-hyung aymsdream@

[Asia Economy Reporter Yoon Seul-gi] After 7 months, the inflation rate has slowed down, with the consumer price inflation rate in August recording in the 5% range. However, concerns are rising that agricultural product prices may soar due to the impact of Typhoon No. 11 "Hinnamnor," known as an "unprecedented typhoon." With the holiday spending for Chuseok coinciding with the typhoon, the burden on ordinary citizens is expected to increase.

According to the Statistics Korea's "August Consumer Price Trends" on the 5th, last month's consumer price index was 108.62 (2020=100), rising 5.7% compared to the same month last year, down 0.6 percentage points (p) from 6.3% in the previous month. Compared to the previous month, it fell by 0.1%, marking the first decline in 21 months since November 2020. The inflation rate, which had soared above 6%, appears to have somewhat stabilized.

This year's inflation rate showed an upward trend for seven consecutive months. It rose 3.6% in January, 3.7% in February, 4.1% in March, 4.8% in April, and 5.4% in May, continuing the upward trend. In June (6.0%) and July (6.3%), it rose to the 6% range, the highest level since November 1998 (6.8%) during the foreign exchange crisis.

The decline in inflation in August was largely influenced by the slowdown in the price increase of industrial products, which are heavily affected by oil prices. The increase in industrial product prices was 7.0%, down from 8.9% the previous month. The month-on-month decline in petroleum prices was the largest in 24 years and 5 months since March 1998 (-15.1%). However, processed food prices rose 8.4%, increasing the rate of rise from 8.2% the previous month.

On the 29th, when the government announced that it would manage the prices of major items before Chuseok at the levels of one year ago and provide up to 4 million won to small business owners, citizens visited the Nonghyup Distribution Hanaro Mart Yangjae branch in Seocho-gu, Seoul to do their shopping. Photo by Jinhyung Kang aymsdream@

Although the inflation rate has slowed after 7 months, experts say it is too early to be complacent. Eo Un-seon, Director of Economic Trend Statistics at Statistics Korea, said in response to the question, "Is the inflation rate peaking and then declining?" that "Unless the trends of external variables such as oil prices or international grain prices completely reverse, there is a real possibility of a peak," but added, "This assumes that external risk factors do not worsen again."

It is also problematic that food prices are rising sharply ahead of Chuseok, increasing household burdens. Agricultural products including vegetables and personal services such as dining out are still on the rise. Agricultural, livestock, and fishery products rose 7.0%, slightly down from 7.1% the previous month, but among them, agricultural products expanded their increase from 8.5% last month to 10.4%.

The agricultural product inflation rate is the highest since June last year (11.9%). In particular, vegetables such as pumpkin (83.2%), napa cabbage (78.0%), cucumber (69.2%), and green onions (48.9%) rose 27.9%, increasing from 25.9% the previous month. This is the highest inflation rate since September 2020 (31.8%). The dining out inflation rate recorded 8.8%, the highest since October 1992 (8.8%), influenced by price increases in chicken (11.4%) and raw fish (9.8%). Personal services other than dining out, such as insurance service fees (14.9%), rose 4.2%.

Additionally, concerns are rising that agricultural product prices may surge due to Typhoon "Hinnamnor." Typically, after monsoons, typhoons, or droughts, agricultural product supply is disrupted, causing prices to rise. In August, when record-breaking heavy rain fell in the Seoul metropolitan area and central regions for the first time in 80 years, vegetable prices surged.

According to the Korea Agro-Fisheries & Food Trade Corporation (aT) Agricultural Product Distribution Information (KAMIS) on the 12th of last month, right after the heavy rain, the wholesale price of 20kg of radish was 28,180 won, about 24% higher than 21,200 won on August 5th, a week earlier. During the same period, the price of 10kg of cucumber rose about 43% from 23,800 won to 34,250 won, and the price of 4kg of spinach rose about 7.4% from 47,240 won to 50,780 won.

As a sharp rise in agricultural product prices is expected after the typhoon, the government has announced it will focus on stabilizing prices. On the morning of the same day, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho held an "Emergency Macroeconomic and Financial Meeting" at the Seoul Banking Hall and said, "The consumer price inflation rate in August fell from the previous month for the first time in 21 months, recording 5.7%. It is fortunate that the inflationary pressure has eased ahead of the Chuseok holiday, but the level remains high."

He added, "There are also concerns about worsening weather conditions such as typhoons following the monsoon," and emphasized, "The government will concentrate all policy capabilities to promptly stabilize prices and people's livelihoods."

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