The consumer price index in October recorded a rise in inflation rates to the upper 2% range, raising concerns that the government's annual inflation forecast may not be achievable. The cumulative inflation rate from January to October has already exceeded the government's estimate, driven by rising oil prices and the ongoing increase in prices of processed goods. If inflation does not significantly slow down in the remaining two months, it is likely to surpass the government's annual forecast.
According to the National Data Agency's report on consumer price trends for October 2026, the consumer price index stood at 120.73 (2020=100), reflecting a 2.8% increase compared to the same month last year. Although the increase has slowed by 0.1 percentage points from September's 2.9%, it remains in the upper 2% range.
The cumulative inflation rate for the year from January to October is recorded at 2.7%. Earlier, the Ministry of Economy and Finance projected an annual consumer price inflation rate of 2.6% in its economic policy direction for the second half of the year. The cumulative inflation rate over the past ten months has already exceeded the government's estimate by 0.1 percentage points. For the annual forecast to be met, inflation rates in November and December must decrease significantly. This also presents a considerable gap from the Bank of Korea's inflation target of 2.0%.
Core inflation, which reflects the underlying trend, also raises concerns. The index excluding food and energy, as well as the index excluding agricultural products and fuels, both increased by 2.8% compared to the same month last year. Both indices have shown an expanded increase compared to September, indicating that inflationary pressures remain even when excluding temporary fluctuations in agricultural or energy prices. The living cost index, which focuses on frequently purchased items, also rose by 2.6%, continuing to reflect the burden of inflation on consumers.
Notably, the upward trend in fuel prices shows no signs of abating. Last month, fuel prices surged by 14.9% compared to the same month last year. Gasoline and diesel prices rose by 11.6% and 19.7%, respectively, while liquefied petroleum gas (LPG) for vehicles and cooking also recorded double-digit increases. Consequently, transportation costs increased by 6.8%, marking the highest rise among all expenditure categories.
Lee Doo-won, an economic trend statistics advisor at the National Data Agency, explained regarding fuel prices, "Since these items are not designated as maximum price items, they appear to reflect the full extent of the rise in international oil prices." While the government's maximum price system limits price increases for certain items, those not covered, such as LPG, are more directly affected by international price hikes. In fact, the price of Dubai crude oil in October was $110.4 per barrel, a 69.8% increase from about $65 per barrel in the same month last year.
Prices of industrial products are also contributing to inflation. Last month, industrial products rose by 4.4% compared to the same month last year, with processed foods increasing by 2.9%. The National Data Agency noted that this rise reflects the return of prices to normal levels following discount promotions ahead of the Chuseok holiday in September. Prices for mobile phones and computers also rose by 10.8% and 26.2%, respectively, impacting durable goods prices.
Service prices continued to rise as well. Personal services increased by 3.3%, and dining costs rose by 2.9%. Excluding dining, personal services also saw a 3.6% increase, indicating significant price pressures in the service sector. Insurance service fees rose by 13.4% due to increases in health insurance premiums.
Conversely, prices for agricultural, livestock, and fishery products fell by 1.7% compared to the same month last year, partially alleviating overall inflation. Specifically, agricultural products dropped by 7.5%, and vegetable prices fell by 11.2%, attributed to increased vegetable shipments due to favorable weather conditions. The advisor noted, "The increase in vegetable shipments due to good weather conditions has led to price declines." However, prices for livestock and fishery products rose by 4.8% and 5.4%, respectively, indicating ongoing disparities in food prices.
The government plans to exert all efforts to stabilize prices amid ongoing uncertainties from the Middle East conflict. On the same day, Kwon Dae-young, the first deputy minister of the Ministry of Economy and Finance, held a meeting to review price trends and the supply status of agricultural, livestock, and fishery products.
Kwon emphasized, "While October's consumer prices have shown stable trends compared to major countries, the perceived cost of living remains high, so we will ensure thorough price management. We will carefully monitor the government's tariff allocations and financial support to ensure they translate into actual consumer price stability and strengthen communication with the industry."
He added, "We will continuously monitor essential items closely related to the public's daily lives, such as agricultural, livestock, and fuel products, and respond swiftly to any abnormal signs. We will consistently pursue the efficiency of distribution structures and respond strictly to unfair practices such as collusion."
* This article has been translated by AI.
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