Consumer Prices in Korea Grow at Slowest Pace in Over a Year
Key Highlights :
Korea's consumer prices grew at the slowest pace in more than a year in April, according to data released Tuesday. The news is a sign that inflation has receded, as falling global oil prices have contributed to the slowdown.
The report from Statistics Korea showed that consumer prices rose 3.7 percent on-year in April, down from 4.2 percent in March. This is the first time in 14 months that the on-year inflation growth fell below 4 percent. The figure had jumped to as high as 6.3 percent in July before the overall downward trend began.
The Bank of Korea held the benchmark interest rate steady for the second straight time at 3.5 percent in April, due to easing inflationary pressure and concerns about an economic downturn. Prices of petroleum products fell 16.4 percent on-year, marking the sharpest decline since May 2020. This contributed to the slowdown in consumer prices, as Korea depends mainly on imports for its energy needs. Prices of Dubai crude, Korea's benchmark, stood at $83.44 per barrel on average in April, down nearly 20 percent on-year.
The prices of agricultural, fisheries and livestock products rose 1 percent on-year in April, down from a 3 percent growth the previous month. Prices of utility services climbed 23.7 percent on-year, slowing from a 28.4 percent jump in March. Prices of personal services grew 6.1 percent on-year last month, due to higher costs for dining out, as well as insurance and housing management costs.
Core inflation, which excludes volatile food and oil prices, rose 4.6 percent on-year last month, compared with a 4.8 percent growth in March. Prices of daily necessities ― 141 items closely related to people's daily lives, such as food, clothing and housing ― advanced 3.7 percent last month, slowing from a 4.4 percent growth in March.
Given the high base effect, prices are expected to stabilize further in the second half of this year. However, uncertainties remain regarding global oil prices, potential hikes in gas and electricity rates, and the won-dollar exchange rates. The Bank of Korea will continue to monitor these factors and take necessary steps to ensure price stability in the Korean economy.
