Tue, 29 Sep 2020

SEOUL, Aug. 4 (Xinhua) -- South Korea's headline inflation made the first rebound in three months, but it hovered below 1 percent due to a negative effect of the COVID-19 outbreak, a cheaper global crude oil and a policy effect, statistical office data showed Tuesday.

The consumer price index (CPI) stood at 104.86 in July, up 0.3 percent from the same month of last year, according to Statistics Korea. It was the first turnaround in three months after falling 0.3 percent in May and making no change in June.

After peaking at 1.5 percent in January, the consumer price inflation slowed to 1.1 percent in February, 1.0 percent in March and 0.1 percent in April respectively as the COVID-19 pandemic lowered demand-side inflationary pressure.

Core consumer price, which excludes volatile agricultural and oil products, rose 0.7 percent in July from a year ago. The OECD-method core price, which excludes food and energy costs, added 0.4 percent last month.

The July rebound in headline inflation was mainly ascribable to higher farm goods price.

Price for agricultural, livestock and fishery products increased 6.4 percent in July from a year earlier, pulling up the overall consumer price inflation by 0.48 percentage points.

Agricultural product price gained 4.9 percent, while prices for livestock and fishery products picked up 9.5 percent and 5.2 percent respectively.

Higher farm goods price came as people refrained from eating out and preferred cooking at home amid the fear of virus infection.

The fresh food price index, which reflects price for fresh fruit and vegetable, advanced 8.4 percent in July, recording the highest since November 2018. Vegetable price soared 16.5 percent due to heavy rains that reduced the amount of harvest.

Price for onion, sweet potato, lettuce and napa cabbage jumped more than 30 percent in the cited month, and the price for pork and beef went up 14.3 percent and 9.8 percent each.

The so-called livelihood cost index, which measures cost for daily necessities, was unchanged last month compared to a year earlier.

Price for industrial products slipped 0.4 percent in July from a year earlier, pulling down the overall inflation by 0.13 percentage points.

Amid the still low price of global crude oil, price for diesel and gasoline retreated 13.8 percent and 8.6 percent each last month on a yearly basis.

Price for electricity, tap water and natural gas slumped 4.5 percent in July as the government cut the gas charge. It pulled down the overall headline inflation by 0.16 percentage points.

Services price added 0.2 percent in July from a year earlier thanks to a policy effect such as free education for high school students and free school meal.

Public services cost diminished 1.9 percent in the month, lowering the overall inflation by 0.27 percentage points. Private services price gained 1.1 percent last month.

The low inflationary pressure is expected to leave more room for the Bank of Korea (BOK) to keep its target rate at a record low for an extended period of time.

The BOK cut its key rate by 25 basis points to an all-time low of 0.50 percent in May, after slashing it by 50 basis points in March to tackle an economic fallout from the COVID-19 pandemic.

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