The impact of rising oil prices due to the conflict in the Middle East has led to a significant increase in consumer inflation, reaching its highest level in 26 months. The surge in fuel prices has spread to transportation and travel services, raising overall living costs.
According to the National Data Agency's report on consumer price trends for May 2026, the consumer price index rose to 119.92 (2020=100), marking a 3.1% increase compared to the same month last year. This is the first time the inflation rate has reached the 3% range since March 2024 (3.1%).
Inflation rates have steadily increased this year, rising from 2.0% in February to 2.2% in March, 2.6% in April, and now 3.1% in May. Analysts suggest that the breach of the 3% mark indicates that the prolonged conflict in the Middle East is beginning to affect domestic prices significantly.
In May, fuel prices soared by 24.2% compared to the previous year, contributing 0.92 percentage points to the overall inflation rate. This marks the highest increase since July 2022 (35.2%). Gasoline prices rose by 23.1%, while diesel prices jumped by 33.3%, both recording their largest increases since July 2022.
The rise in fuel prices has also pushed up costs in transportation and travel-related services. Transportation prices increased by 11.6%, and international airfares surged by 33.5%, the highest rate since records began in 1995. Prices for overseas group travel, domestic airfares, car rentals, and hotel accommodations have all risen, adding to inflationary pressures.
A representative from the National Data Agency stated, "The increase in fuel prices has been significantly influenced by the war, and the rise in travel demand during the May holidays has further pushed up travel-related service prices. This inflation reflects the impact of supply-side shocks."
The living cost index, which reflects the cost of living, rose by 3.3% compared to the same month last year, the highest level since April 2024 (3.6%). Excluding food, the living cost index increased by 4.2%, further straining consumer budgets.
Conversely, prices for vegetables and fruits stabilized, leading to a 1.4% decline in the fresh food index. Agricultural products fell by 0.8%, but prices for livestock and seafood rose by 5.8% and 5.0%, respectively, resulting in an overall increase of 2.2% for agricultural and marine products.
The National Data Agency noted that the impact of rising fuel prices has not yet spread to dining out or processed foods. A representative commented, "Unlike during the Russia-Ukraine conflict, we are currently facing a situation where demand is subdued while supply shocks are occurring. We need to monitor whether the rise in fuel prices will transfer to other items in the second half of the year."
The government estimated that without measures such as price caps on fuel and reductions in fuel taxes, inflation in May would have risen by 3.7% compared to the previous year. These measures are believed to have lowered last month's inflation by 0.6 percentage points.
Despite these efforts, inflation rates are expected to remain around 3% for some time. The Bank of Korea held a meeting on inflation trends, forecasting that inflation rates will likely stay in the 3% range for the foreseeable future.
Lee Ji-ho, head of the Bank of Korea's research department, stated, "The inflation rate for June is expected to be similar to May due to sustained high fuel prices. The increase in consumer prices in May was driven by rising fuel costs and higher service prices, particularly in travel-related sectors, compared to April. The inflation rate for living costs has also risen to the mid-3% range, increasing the financial burden on vulnerable groups that spend a larger portion of their income on necessities."
The government plans to strengthen its commitment to maintaining price stability amid uncertainties stemming from external factors such as the Middle East conflict. This includes measures to stabilize fuel prices, implement tariff allocations, expand supply, and proactively manage agricultural and marine product supplies in anticipation of extreme weather conditions.
* This article has been translated by AI.
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