OECD Energy Prices Surge by 8.6% in One Month... Korea's Rate Remains Lower than Other Advanced Economies

The Third-Largest Increase Since 1971, According to OECD Data
South Korea, Tightly Linked to the Global Value Chain, Faces Mounting Pressure

Yonhap News Agency

Following the Middle East war, the energy price inflation rate among member countries of the Organisation for Economic Co-operation and Development (OECD) reached 8.6 percentage points in March, marking the highest level in three years and one month. Due to measures such as the oil price cap, Korea's energy price inflation rate remained relatively low at 5.2%. However, given the high level of uncertainty stemming from the ongoing conflict, it is difficult to be reassured.

According to a recently published report by the OECD on May 10, the overall consumer price inflation rate for all OECD member countries in March was recorded at 4.0%. Having dropped from 4.1% in September last year to 3.3% in January and 3.4% in February of this year—remaining in the low to mid-3% range—the rate jumped by 0.6 percentage points in March. Consumer prices in March increased in 33 out of the 37 member countries for which monthly data is available compared to the previous month.

The report identified the surge in energy prices triggered by the outbreak of the Middle East war at the end of February as the main factor. In March, the year-on-year growth rate for OECD energy prices reached 8.1%, the highest since February 2023 (11.9%) and the largest increase in three years and one month. Compared to the previous month (-0.5%), the rate rose by 8.6 percentage points within a single month.

This is the largest increase in four years and eleven months since April 2021 (9.0 percentage points), when the base effect from the COVID-19 pandemic-induced collapse in oil prices was at play, and the third largest since the OECD began compiling related statistics in 1971.

The report analyzed, "Among the 35 member countries with monthly energy price data, 32 saw a rise in the inflation rate compared to the previous month, and seven countries posted double-digit increases." The OECD pointed out that not only is the energy price shock from the Middle East war unprecedented, but its impact is also widespread.

The OECD also found a similar pattern among the Group of Seven (G7) countries. The overall consumer price inflation rate for the G7 rose by 0.7 percentage points, from 2.1% in February to 2.8% in March. The energy price inflation rate within the G7 spiked by 10.0 percentage points, jumping from -1.8% in February to 8.2% in March.

In Korea, the energy price inflation rate in March was 5.2%, lower than in other major countries such as the United States (12.5%), Germany (7.6%), and France (7.1%). This is believed to reflect the effects of policy measures such as the oil price cap and reductions in fuel taxes. However, there are concerns that if global inflation accelerates, Korea—whose value chains are closely interconnected with the rest of the world—may face even greater pressure.

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