Consumer prices in South Korea have dropped to a 2% increase for the first time in three months, thanks to stable international oil prices. However, the burden of living costs remains high. Prices for petroleum products continue to rise at double-digit rates, and the cost of electronic devices has surged due to increased semiconductor prices.
According to the National Data Agency's report on consumer price trends for July 2026, the consumer price index reached 119.77 (2020=100), marking a 2.8% increase compared to the same month last year. This is the first time the inflation rate has returned to the 2% range in three months. Earlier this year, consumer prices maintained a 2% increase from January to April, before rising to over 3% in May and June.
By category, goods prices rose by 3.0% year-on-year, while service prices increased by 2.6%. The government has noted that oil prices have stabilized, yet they still show significant increases. Diesel prices surged by 21.5%, gasoline by 12.6%, and kerosene by 20.5%.
The rise in electronic device prices is also notable. Computers increased by 25.1%, and portable multimedia devices rose by 22.5%, contributing to the overall consumer price increase. Additionally, the price of electric vehicles rose by 6.2% compared to last year.
Lee Doo-won, an economic statistics officer at the National Data Agency, stated, "The price increase in portable multimedia devices is due to rising semiconductor prices. The increase in electric vehicle prices is attributed to new product launches, renewals of existing products, and the impact of the restoration of the individual consumption tax, resulting in a 6.2% rise compared to the same month last year."
Service prices rose by 2.6%. Public services increased by 1.4%, housing costs by 1.1%, and personal services by 3.5%. The rise in prices is attributed to the vacation season, with costs for overseas group travel increasing by 20.0%.
Electricity, gas, and water prices saw a modest increase of 0.4% compared to the same month last year, which is attributed to the application of progressive rates during the summer.
Food prices also contributed to the overall inflation. Prices for domestically sourced beef rose by 5.7%, imported beef by 8.7%, pork by 1.8%, and mackerel by 7.0%. Other notable increases included rice at 7.9%, eggs at 7.5%, and green onions at 18.3%.
The fresh food index increased by 2.5% year-on-year. Fresh fish prices rose by 4.4%, while fresh vegetables and fruits fell by 4.3% and 4.7%, respectively. The living cost index increased by 2.5% compared to July last year, with food prices rising by 1.6% and non-food items by 3.2%. The living cost index, including rent, rose by 2.3%.
The core inflation index, excluding agricultural and petroleum products, increased by 2.5% year-on-year, while the OECD's index, excluding food and energy, rose by 2.6%.
While consumer prices have returned to the 2% range, there are forecasts that the increase may rise again in August. Analysts suggest that uncertainties in international relations due to the Middle East conflict and the base effect from last year's SK Telecom data breach, which led to reduced communication costs, could drive prices higher.
Lee noted, "With the Middle East conflict unresolved and recent fluctuations in international oil prices, we need to monitor the potential for price increases in processed foods due to rising oil prices in the second half of the year. Uncertainties related to exchange rates and international raw material prices remain, indicating that there may be temporary upward pressures on prices in August."
* This article has been translated by AI.
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