South Korea's consumer prices rise 3.1% in August driven by oil and mobile service costs
Quick Look
- South Korea's consumer prices increased 3.1% year-on-year in August, driven by elevated oil prices and higher mobile service charges due to a low base effect from last year's discounts following a data breach.
- Core inflation also rose to 3.4%, the highest since May 2023.
AI-generated summary
Why It Matters
South Korea's inflation has fluctuated in recent months, with core inflation reaching 3.8% in May 2023. The country relies heavily on imported energy, making it sensitive to global oil price movements.
South Korea's consumer prices moved up 3.1 percent in August from a year earlier as oil prices remained elevated, along with higher mobile service subscription charges due to a low base effect from large-scale discounts offered last year following a hacking incident, data showed Wednesday.
According to data from the Ministry of Data and Statistics, consumer price growth reached above 3 percent in August, accelerating from a 2.8 percent on-year rise in July.
The consumer price increase came to 3.1 percent and 3.2 percent in May and June, respectively.
The latest figures came as oil prices remained elevated by moving up 14.2 percent on-year in August, although the growth slowed from 15.6 percent posted in July.
Oil prices contributed 0.54 percentage point of the on-year consumer price growth in August, down from 0.6 percentage point posted in July.
In August, diesel prices rose sharply by 19.6 percent and gasoline prices advanced 11.5 percent.
South Korea relies heavily on imports to meet its energy needs.
The increase was also partly driven by a 26.7 percent rise in mobile phone service charges, reflecting a low base from a year earlier, when SK Telecom Co. offered large-scale discounts following a data breach.
Core inflation, which excludes volatile food and energy prices, also advanced 3.4 percent on-year in August. It was the highest level since 3.8 percent posted in May 2023.
The report showed that prices of overall industrial products rose 3.7 percent from a year earlier in August.
Prices of agricultural, livestock and fishery products, on the other hand, fell 2.6 percent, led by lower prices of napa cabbage and tomatoes.
The report showed that prices of imported beef and domestically produced beef rose 6.2 percent and 3.3 percent, respectively.
Prices in the service sector rose 3.7 percent, led by higher insurance premiums and overseas package tour prices, which increased 13.4 percent and 14.9 percent, respectively.
Prices of electricity, gas and water rose 0.4 percent over the period.
What to Watch
AI outlook — possibilities, not facts
The Bank of Korea may maintain its current benchmark interest rate in the near term to address persistent inflation.
Likely · Within weeks
Open Questions
- How long will oil prices remain elevated?
- Will the Bank of Korea adjust its monetary policy in response to this inflation data?
- Are mobile service price increases likely to continue beyond the base effect period?
