Inflation stays above 1 percentConsumer prices in March grew 1 percent compared with a year ago, the third straight month in which the country has seen inflation reach that mark - but core inflation was at its lowest point in more than a decade.
Data released Thursday by Statistics Korea showed consumer price increases slowing slightly compared with the two previous months - 1.5 percent in January and 1.1 percent in February. Rising food prices and lower growth in March 2019 both contributed to the most recent price increases.
“As people started to take part in social distancing, there have been changes to the way people spend, such as eating at home rather than going out to eat,” Statistics Korea official Ahn Hyung-joon said. “As a result, food prices were up.”
Agriculture, livestock and fishery prices were up 3.2 percent, raising overall inflation by 0.24 percentage points. One of the biggest jumps was in egg prices, which surged 20.3 percent compared with the same time last year. Pork prices rose 9.9 percent.
Prices for manufactured goods were up 1.3 percent, driven largely by a rise in prices of processed foods, which grew 1.7 percent.
Oil prices rose 6.6 percent, owing to the restoration of fuel taxes in September, which had been cut earlier last year. The statistics agency said the increase in oil prices was limited amid a recent nosedive in international oil prices.
Core inflation, which excludes volatile goods such as food and energy, stood at just 0.4 percent in March, the lowest since December 1999.
Although he waived off the possibility of a deflation, Ahn said inflation could fall below 1 percent.
“We will have to further monitor the impact that Covid-19 has on consumer prices, as there are various factors at play, such as shrinking income caused by the influence of the Covid-19 on the economy, or the possibility of prices rising due to problems in the global supply chain,” Ahn said.
Unsurprisingly, the numbers from the service industry were especially dismal. The industry saw prices rise just 0.5 percent on year.
Restaurant prices rose 0.9 percent.
“The restaurant inflation rate was limited to 0.9 percent as people have been refraining from going out,” Ahn said.
Hotel lodging prices fell 5.2 percent, the sharpest drop since August 2010, when it tumbled 94 percent. Condo prices fell 3.1 percent.
Analysts are concerned that falling sales caused by the coronavirus’s continued influence on spending could further drive down inflation, in turn forcing businesses to cut back on production.
In an apparent move to manage expectations, Finance Minister Hong Nam-ki last month admitted that the Korean economy could see negative growth in the first quarter.
BY LEE HO-JEONG [email@example.com]
with the Korea JoongAng Daily
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