Inflation passes 2% for first time in four years

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Inflation passes 2% for first time in four years

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Consumer prices rose more than 2 percent last month as fresh produce prices jumped 12 percent compared to the previous year.

It was the first time inflation surpassed 2 percent since October 2012, Statistics Korea said Thursday.

“Consumer prices rose in January due to price increases in agricultural products, including fresh eggs,” said Yoo Soo-young, a director at the Ministry of Strategy and Finance. “The rise in global crude oil prices also had an impact on pushing up inflation in the country.”

Korea’s inflation remained below 1 percent from May to August but started rising to nearly 1.5 percent in the latter half of last year. The government’s data showed that fresh eggs were one of the main products driving up inflation. Their prices rose 61.9 percent after the country’s worst bird flu outbreak in years hurt the domestic supply of eggs and forced the government to make the unprecedented move of importing eggs from the United States.

Overall agricultural product prices rose 8.5 percent in January compared to the previous year, contributing 0.67 percentage points to overall inflation. Fresh vegetable prices went up by 17.8 percent, fruits by 9.6 percent, napa cabbage by 78.8 percent and white radish by 113 percent.

Service prices, including for rent, travel and dining, increased 2.2 percent, contributing 1.21 percentage points to overall inflation. In particular, the cost of rent went up by 1.7 percent.

As crude prices rose last month, the prices of transportation and manufactured goods increased as well.

Transportation fees jumped 3.8 percent, the highest since June 2012 when it reached 4.2 percent. Prices of manufactured goods went up 1.6 percent.

Dubai crude recorded $48 per barrel in the fourth quarter of last year, and it is expected to rise to $50 per barrel in the first quarter this year, the Finance Ministry said. The government added that the inflation will remain in the 1.5 percent to 2 percent range following the increase in crude prices.

Consumer prices rose the most on Jeju Island, by 2.8 percent, followed by Daegu and Gwangju with 2.4 percent. Inflation was lowest in Daejeon at 1.5 percent.

“The government will monitor consumer and global oil prices thoroughly and try its best to stabilize the local retail and agricultural industries,” said Yoo at the Finance Ministry.

The government’s statistics agency researched 460 major goods that Koreans purchased in 38 major cities and provinces.


BY KIM YOUNG-NAM [kim.youngnam@joongang.co.kr]

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