Korea's consumer prices rose 5.4% in May

Economy

Published: 03 Jun. 2022, 13:17 Updated: 03 Jun. 2022, 13:18

Korea's consumer prices rose 5.4% in May

Flour sold at a grocery store in Seoul. Consumer price for the first time since 2008 rose more than 5 percent. Flour was one of the products that saw a sharp increase as it was 26 percent more expensive than a yer ago. [YONHAP]

Consumer prices rose 5.4 percent in May, continuing to feel the pressure from the Russia-Ukraine war and supply chain disruptions.

The lifting of the social distancing regulations also contributed, according to Statistics Korea on Friday.

It was the first month this year that consumer price rose more than 5 percent and was the fastest rate since 5.6 percent in August 2008.

In the last two months, consumer prices have risen more than 4 percent.

Finance Minister Choo Kyung-ho has predicted the increase will remain above 5 percent due to complex factors both internal and external.

Core inflation, which excludes volatile agricultural and petroleum goods, rose 4.1 percent in May, the sharpest increase since March 2009.

Prices grew in all categories including manufactured goods, groceries, fresh produce and even utility bills.

Manufactured goods including refined oils and processed food rose 8.3 percent, which was the sharpest year-on-year increase since 9.1 percent in October 2008.

Gasoline prices rose 27 percent while diesel saw a sharper surge of 46 percent.

Among processed foods, flour prices rose 26 percent, cooking oil 22.7 percent and bread 9.1 percent.

Agriculture, fishery and livestock prices, which have been stable in recent months, rose 4.2 percent.

Livestock prices were up 12 percent, pork 20.7 percent and imported beef 28 percent. Chicken prices were up 16 percent.

Prices of services such as restaurant and hair salons were up 5.1 percent. Prices at restaurant saw a sharper increase of 7.4 percent.

Utility bills including electricity and gas, used for cooking and heating, were up 9.6 percent, the sharpest rise since January 2010.

“It’s likely that in June consumer price will increase above 5 percent,” said Eo Woon-sun, a spokesman for Statistics Korea.

There’s growing worries over the possibility of stagflation, or high inflation and zero economic growth.

The Korea Development Institute expects the economy to grow 2.8 percent this year instead of the 3 percent it predicted in Feburary. It raised its estimate for consumer price growth from 1.7 percent to 4.2 percent.

The Bank of Korea revised its growth outlook from 3 percent to 2.7 percent and consumer price growth from 3.1 percent to 4.5 percent.

The Finance Ministry will be announcing a revised outlook for the economy and inflation later this month.

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