Inflation hits 13-year high as prices up across the board

Economy

Published: 03 May. 2022, 16:45 Updated: 03 May. 2022, 20:19

Inflation hits 13-year high as prices up across the board

A market in Seoul on Tuesday. While prices of agricultural goods declined last month, prices in all other major categories increased. [YONHAP]

Inflation is at a 13-year high as prices rose almost across the board last month, with agricultural goods as the only major category in which declines were reported.

The reading provides more evidence that inflation is not transitory and adds to concerns that monetary policy will have to be tightened fast to limit damage to already stressed household budgets.

Consumer prices rose 4.8 percent year-on-year in April, according to Statistics Korea. It's the sharpest increase since October 2008, when prices increased at the same pace, and the second consecutive month above 4 percent.

In March, prices rose 4.1 percent on year.

Core inflation, which excludes food and energy, in April was 3.1 percent.

"The increase in the prices of manufactured goods continued, while services became more expensive," said Eo Woon-sun, a Statistics Korea official. "Higher utility bills also contributed to the increase."

The prices of manufactured goods rose 7.8 percent, and petroleum goods prices were up 34.4 percent year-on-year.

Petroleum prices rose 28.5 percent, while diesel was up 42.4 percent. Automobile LPG gas prices increased 29.3 percent. Utility prices were up 6.8 percent, with electricity prices increasing 11.0 percent and gas 2.9 percent.

Kepco's rates are up from a range of 88.3 won per kilowatt-hour to 275.6 won per kilowatt-hour in April 2021 to a range of 93.2 won per kilowatt-hour to 280.5 won per kilowatt-hour in April 2022.

Manufactured food and beverage prices rose 7.2 percent.

Agriculture, livestock and fishery product prices were down 1.4 percent. Vegetable and grain prices fell 5.4 percent year-on-year, while meat was 7.1 percent more expensive.

Services were 3.2 percent more expensive.

Restaurant and cafe prices rose 6.6 percent year-on-year. This is the same increase as in March. The last time these prices grew so fast was in April 1998.

Transportation prices were up 13.8 percent on year.

The latest consumer price report is the last released under the Moon Jae-in government.

This month, the fuel tax cut was increased to 30 percent from 20 percent. The cut will be in effect until July.

Due to high inflation and high asset prices, the central bank is under pressure to increase rates for a fifth time in the current round of tightening. It has raised the base rate from half a percent to 1.5 percent since August last year.

"The Bank of Korea raised interest rates in April, faster than expected," said Ahn Ye-ha, Kiwoom Securities analyst. "Additional interest rate increases are possible in May and in July as consumer prices are high."

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]