SEOUL– South Korea’s consumer prices rose more than 2 percent for the fifth straight month in August due to high prices of farm and oil products, data showed Thursday, indicating a continued build-up of inflationary pressure amid an economic recovery.
The consumer prices rose 2.6 percent in August from a year earlier, the same growth as the previous month, according to the data compiled by Statistics Korea.
Compared with a month earlier, consumer inflation rose 0.6 percent last month, accelerating from a 0.2 percent on-month gain in July.
Core inflation, which excludes volatile food and oil prices, rose 1.3 percent on-year in August.
The country’s price pressure has been under upward pressure as the economic recovery accelerates.
The Bank of Korea (BOK) recently raised its 2021 inflation outlook to 2.1 percent from its earlier estimate of 1.8 percent. The BOK aims to keep annual inflation at 2 percent over the medium term.
“Price pressure from farm products and oil prices was larger than expected amid increased demand-pull inflationary pressure from the economic recovery,” Eo Woon-sun, a senior statistics agency official, told reporters.
He said consumer inflation may top 2 percent this year, given current price trends.
Last month, prices of agricultural and petroleum products continued to extend their gains, but the growth rates of the prices slowed compared with July.
Prices of agricultural, livestock and fishery products rose 7.8 percent on-year, due largely to the impact of scorching summer weather. Those of eggs jumped 54.6 percent even as the country has reported no cases of bird flu since April.
Prices of petroleum products increased 21.6 percent as oil prices remained high amid the global economic recovery. Prices of industrial products grew 3.2 percent on-year, the fastest in more than nine years.
Home prices increased 1.6 percent last month, marking the 16th straight month of rises. Housing prices extended their gains despite the government’s efforts to curb them.
Prices of daily necessities, — 141 items closely related to people’s daily lives, such as food, clothing and housing — rose 3.4 percent on-year in August.
The data came as the BOK raised the benchmark interest rate last month by a quarter percentage point to 0.75 percent from a record low of 0.5 percent, marking the first pandemic-era rate hike.
BOK Gov. Lee Ju-yeol hinted that the central bank may again raise the key rate this year or early next year.
The finance ministry earlier expected inflation to stabilize in the second half, but inflationary pressure is building amid the economic recovery.
The country’s economy grew 0.8 percent in the second quarter from three months earlier, faster than an earlier estimate of 0.7 percent, central bank data showed.
The BOK kept its 2021 growth outlook for the South Korean economy at 4 percent despite the latest resurgence in COVID-19 cases.
A continued rise in prices of agricultural, livestock and fishery products have made buying fresh food more burdensome ahead of the fall harvest Chuseok holiday set for Sept. 20-22.
The government said it will step up efforts to stabilize prices of farm products before the Chuseok holiday as demand for vegetables, eggs and other foodstuffs tends to rise during the traditional holiday.
The finance ministry said demand for the holiday and oil price could serve as upside pressure on inflation, while the government’s plan to increase the supply of farm products will likely ease inflationary pressure.
Source: Yonhap News Agency