SEOUL, October 2 (AJP) — South Korea's annual consumer inflation eased below 3 percent in September despite elevated petroleum prices and the Chuseok holiday, reflecting depressed domestic demand amid strong economic growth.
The consumer price index rose 2.9 percent from a year earlier, slowing from 3.1 percent in August, while adding 0.2 percent from the previous month, the Ministry of Data and Statistics said Friday.
The slowdown offered some relief, although the fading distortion in telecom prices complicates an assessment of underlying demand pressures.
SK Telecom offered subscribers a temporary 50-percent mobile-phone fee discount in August last year following a hacking incident, sharply lowering telecom prices at the time and creating a low comparison base for this August.
Communication prices rose 2.0 percent from a year earlier in September, compared with a 16.6 percent jump in August.
The Bank of Korea (BOK), however, said the underlying pace of price increases had somewhat accelerated after accounting for the disappearance of the temporary telecom-related base effect. The central bank estimated that the distortion had added about 0.6 percentage point to headline inflation in August.
Price pressures remained strong elsewhere. Industrial product prices climbed 4.2 percent from a year earlier, accelerating from 3.7 percent in August, while petroleum products jumped 14.8 percent.
“Processed food price gains widened as recent factory-gate price increases for bread, ready-to-eat meals and frozen foods were gradually reflected,” Lee Doo-won, director general for economic trend statistics at the ministry, said at a briefing.
Diesel prices surged 20.0 percent and gasoline rose 11.8 percent. Petroleum products alone contributed 0.56 percentage point to headline inflation, although their prices edged down 0.2 percent from August.
Personal services rose 3.5 percent from a year earlier, contributing 1.21 percentage points to the overall increase. Dining-out prices gained 2.5 percent, while other personal services rose 4.3 percent.
Core inflation excluding food and energy slowed to 2.8 percent from 3.4 percent in August, with the index falling 0.1 percent on the month. A separate measure excluding agricultural and petroleum products eased to 2.7 percent from 3.1 percent, although it rose 0.2 percent from August.
The BOK said cost pressures continued to pass through to personal services, particularly airfares and travel-related services, while higher semiconductor prices widened gains in electronics and other durable goods.
Agricultural, livestock and fisheries prices fell 0.3 percent from a year earlier, with fresh fruit prices dropping 11.1 percent, helping offset higher energy and service costs. Livestock and fisheries prices nevertheless rose 3.7 percent and 4.5 percent, respectively.
Lee said discount support and supply conditions around the Chuseok holiday both contributed to the decline in agricultural, livestock and fisheries prices.
The annual figures also masked a sharp monthly increase in some food costs during the holiday month. Fresh vegetable prices jumped 14.3 percent from August, while agricultural, livestock and fisheries prices overall rose 2.3 percent.
Electricity charges increased 12.4 percent from the previous month. The broader electricity, gas and water category rose 5.5 percent on the month but was only 0.4 percent higher than a year earlier.
The living necessities index, which tracks goods and services frequently purchased by households, rose 2.5 percent from a year earlier, slowing from 3.2 percent in August. It nevertheless increased 0.7 percent on the month, outpacing the headline index.
Consumer prices rose an average of 2.6 percent in the first nine months compared with the same period last year.
The central bank said inflation is likely to remain elevated, particularly in core items, amid the pass-through of cost shocks, increasing demand-side pressures and continued uncertainty surrounding the Middle East conflict.
AJP Takeaways
- Annual inflation eased to 2.9 percent from 3.1 percent as a telecom-related base effect faded, while monthly price growth accelerated to 0.3 percent.
- Petroleum prices rose 14.8 percent from a year earlier, adding 0.56 percentage point to inflation. Personal services contributed another 1.21 percentage points.
- Household costs remained under pressure: fresh vegetables jumped 14.3 percent on the month and living necessities rose 0.7 percent, even as core prices excluding food and energy fell 0.1 percent.
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