S. Korea's headline inflation hits 5-month high on expensive farm goods
Source: Xinhua | 2020-09-03
South Korea's headline inflation hit a five-month high in August on expensive farm goods, though it stayed low due to cheap crude oil and economic fallout from the COVID-19 outbreak, statistical office data showed Wednesday.
The consumer price index (CPI) stood at 105.50 in August, up 0.7 percent from a year earlier, according to Statistics Korea. It was the fastest increase in five months since March.
The consumer price rose 0.1 percent in April, before falling 0.3 percent in May. It made no change in June, but the consumer price inflation climbed to 0.3 percent in July and 0.7 percent in August each.
Price for agricultural, livestock and fishery products advanced 10.6 percent in August from a year earlier, the highest in three years since August 2017.
It pulled up the overall headline inflation by 0.81 percentage points as the prolonged rainy season and heavy rains reduced crops, resulting in higher farm goods price.
Agricultural product price rose in double figures as the vegetable price surged 28.5 percent in August from a year ago, marking the highest since November 2016.
Price for napa cabbage, sweet potato, zucchini and tomato soared between 40 percent and 70 percent last month.
Livestock product price picked up 10.2 percent in the cited month on higher beef price, while fishery product price increased 6.4 percent.
The fresh food price index, which gauges cost for fresh vegetable and fruit, jumped 15.8 percent in August, logging the highest since January 2017.
Demand for food ingredients grew as the COVID-19 pandemic encouraged people to cook at home.
The higher farm goods price boosted the headline inflation, but demand-side inflationary pressure remained weak owing to the economic downturn from the COVID-19 outbreak across the world.
Core consumer price index, which excludes volatile agricultural and oil products, added 0.8 percent in August from a year earlier. The index stayed below 1 percent for 13 straight months since August 2019.
Amid the low inflationary pressure, the Bank of Korea (BOK) cut its target rate by 25 basis points to an all-time low of 0.50 percent in May to address the economic slump from the COVID-19 pandemic.
Price for industrial products, including oil products, fell 0.4 percent in August from a year earlier on cheaper crude oil. Gasoline and diesel prices advanced 8.7 percent and 13.7 percent each.
Price for electricity, tap water and natural gas retreated 4.4 percent in the month as city gas price dropped in double figures.
Public services price slipped 1.8 percent last month due to expanded coverage of free education and free school meal. Private services cost added 1.1 percent amid the reduced eating-out.
The Ministry of Economy and Finance said in a statement that the September headline inflation would depend on weather conditions such as typhoons as well as the COVID-19 pandemic.
The number of confirmed COVID-19 cases in the country increased in triple digits since Aug. 14 due to cluster infections in Seoul and its surrounding Gyeonggi province linked to church services and a massive rally held in central Seoul on Aug. 15.
The government encouraged people to stay at home and avoid any social gathering or event as part of its tightened quarantine efforts.
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