S.Korea's headline inflation hits 6-month low in April

Source: Xinhua | 2020-05-05

South Korea's headline inflation hit the lowest in six months last month as the COVID-19 outbreak lowered costs relevant to traveling and eating out amid the cheaper crude oil, statistical office data showed Monday.

The consumer price index (CPI) stood at 104.95 in April, up 0.1 percent from the same month of last year, according to Statistics Korea. It was the slowest increase in six months since October last year.

The consumer price inflation, which hovered below 1 percent for the whole year of 2019, rose above 1 percent for the first three months of this year before sliding below the level in April.

The social-distancing campaign, caused by the coronavirus pandemic, encouraged people to avoid outside activities such as traveling and eating out, leading to lower cost for relevant services.

Private services price added 1.0 percent in April from a year earlier. The cost for dining-out services was up 0.8 percent, staying below 1 percent for the fourth consecutive month.

Rental fee for passenger cars dropped 16.0 percent, and hotel room charge retreated 6.8 percent last month.

Public services price slumped 1.6 percent in April from a year earlier, pulling down the overall headline inflation by 0.23 percentage points.

High school tuition plunged 64.0 percent as the country began an expanded free education from April, involving sophomores as well as seniors.

Services price, including private and public services, added 0.2 percent last month. Price for electricity, natural gas and tap water climbed 1.4 percent from a year ago.

Price for industrial products slipped 0.7 percent on the back of cheaper crude oil. The oil product price tumbled 6.7 percent, lowering the overall inflation by 0.28 percentage points.

Passenger vehicle price declined last month as the government temporarily cut consumption tax for vehicles as part of efforts to stoke consumer spending.

Price for agricultural, livestock and fishery products advanced 1.8 percent due to higher demand for food ingredients, as people preferred cooking at home on the fear of the COVID-19.

Price for beef and pork gained 5.4 percent and 2.6 percent each, with egg price jumping 12.3 percent. Price for the processed food rose 1.3 percent last month.

Core consumer price, which excludes volatile agricultural and oil products, added 0.3 percent in April from a year earlier. It was the lowest gain in over 20 years since September 1999.

The OECD-method core price, which excludes food and energy costs, inched up 0.1 percent in the month, marking the lowest since December 1999.

The so-called living cost index, which gauges cost for daily necessities, was up 0.3 percent last month.

The fresh food index, which measures price for fish, shellfish, fruit and vegetable, increased 2.9 percent compared with a year earlier.

The statistical office said uncertainty for headline inflation grew given the mix of upside and downside inflationary pressures from cheaper global crude oil and the COVID-19 outbreak that caused production disruption and weaker consumer spending.