Consumer prices rose 2.8% in July, marking a return to the 2% range for the first time in three months. The government estimates that the reduction in the maximum fuel price has lowered the inflation rate by approximately 0.3 percentage points.
On August 4, the Ministry of Economy and Finance held the 72nd meeting of vice ministers on price issues, chaired by First Vice Minister Lee Hyung-il, to discuss July's consumer price trends, potential inflation risks, and strategies for addressing processed food prices.
In July, consumer prices increased by 2.8% compared to the same month last year. This represents a decrease of 0.4 percentage points from June's 3.2%, marking a slowdown to the 2% range for the first time since April.
Compared to the previous month, consumer prices fell by 0.2%, the first month-on-month decline in eight months.
The decline in prices for agricultural, livestock, and marine products, as well as petroleum, contributed to the overall decrease. Agricultural and marine product prices fell by 0.7%, while petroleum prices dropped by 5.3%. Year-on-year, the increase in agricultural and marine products decreased from 3.2% in June to 0.9% in July, and petroleum prices fell from 24.7% to 15.5%.
Vice Minister Lee stated, "In July, consumer prices fell month-on-month for the first time in eight months, and the year-on-year increase rate eased to the 2% range for the first time in three months. Thanks to policies such as the largest-ever discount support and the reduction of maximum prices, both agricultural and marine products and petroleum saw month-on-month decreases."
The government believes that the seventh reduction in maximum fuel prices, implemented on June 27, has contributed to the slowdown in inflation. By lowering the maximum price by 150 won per liter, the July consumer price inflation rate was estimated to be reduced by about 0.3 percentage points.
In contrast to the Eurozone, where the inflation rate rose from 2.8% in June to 2.9% in July due to rising energy prices, domestic prices showed a downward trend, according to the government.
However, in August, the base effect from telecom costs is expected to push prices back up. Due to discounts on mobile phone bills implemented in August of last year, the increase in mobile phone charges this August is projected to raise the overall consumer price inflation rate by about 0.6 percentage points.
Uncertainties from the Middle East conflict, extreme heat, and potential increases in food prices are also cited as upward pressures on inflation.
Vice Minister Lee emphasized, "Despite the easing of the upward trend, the accumulated increases have kept prices at a high level, and the burden on households remains significant. Therefore, we must remain vigilant and make every effort to address these issues."
The government will continue the maximum price system and on August 4 will select additional 'good gas stations.' It plans to secure crude oil imports and stockpiling capacity to stabilize the supply and prices of petroleum products.
Discount events for all agricultural, livestock, and marine products will continue this month, while the government will promote the import of eggs and mackerel. If prices for mackerel, hairtail, and squid rise, the government plans to release purchased quantities at discounted rates. The supply trends of vegetables and farmed fish, which are sensitive to extreme heat and heavy rain, will also be closely monitored.
The government is set to announce measures to stabilize prices of essential goods and alleviate the burden on vulnerable groups ahead of the Chuseok holiday next month.
* This article has been translated by AI.
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