SEOUL: South Korea’s consumer prices slowed to the lowest level in three-and-a-half years in September, falling below 2% for the first time since early 2021, data show.
Consumer prices, a key gauge of inflation, rose 1.6% year-on-year (y-o-y) last month, compared with a 2% increase a month earlier, according to the data from Statistics Korea.
September’s figure marked the lowest level since February 2021, when consumer prices grew 1.4%.
The figure last came to the 1% range in March 2021 by logging 1.9%.
The government has said that the country is projected to reach the target rate of 2% by around the end of 2024, and it saw consumer inflation stay below 3% for the sixth consecutive month through September.
In January, inflation slowed to 2.8%, dropping below 3% for the first time since July 2023, but it edged up to 3.1% in February and stayed at the same level the following month before cooling to 2.9% in April.
The figure then fell to 2.5% in May and further to 2.4% in June before rising to 2.6% in July.
The finance ministry expects this year’s prices to rise 2.6%.
Prices of agricultural, livestock and fisheries products went up 2.3% y-o-y.
Vegetables, in particular, spiked 11.5%, due to a prolonged heat wave.
Of major items, prices of napa cabbages surged 53.6% and those of radishes spiked 41.6%, adding pressure on households as cabbages and radishes are key ingredients of kimchi, and the annual tradition of gimjang usually takes place from November to December as people make large amounts of kimchi as part of preparations for the cold of winter.
But prices of petroleum products fell 7.6% y-o-y in September on stabilising global oil prices.
It was the first time that the figure fell since February this year.
Dubai crude, South Korea’s benchmark, came to US$73.52 per barrel on average last month, falling from August’s US$77.70, according to government data.
“Prices have stabilised, but there exist uncertainties, such as the growing volatility in global oil prices and surging prices of farm produce caused by abnormal weather conditions. The government will not relax our guard and continue to strive for curbing inflation,” Finance Minister Choi Sang-mok said during an economy-related ministers’ meeting.
As the inflation reading came below the Bank of Korea’s (BoK) midterm target of 2%, there have been expectations for an interest rate cut as early as October.
In August, the BoK froze the key rate at a 16-year high of 3.5%, unchanged since February 2023, despite moderating inflation.
Governor Rhee Chang-yong said the central bank needs to consider rising home prices and surging household debts as crucial factors for a possible rate cut despite sluggish domestic demand. — Korea Herald/ANN
