Service-price inflation hits Koreans hard, and rises could last
Inflation is hitting Koreans where it really hurts. At the restaurants. At the laundry. And at the barber.
Don't even ask about the cost of travel domestically.
According to Statistics Korea, prices of 106 services out of 116 tracked rose last month.
A 57-year-old owner of a laundry in Seocho District, southern Seoul, has recently upped the cost of dry cleaning by 1,000 won ($0.75) to 4,000 won.
“People think operating a laundry only requires labor, but we also need to consider the cost of ingredients, such as detergent and hangers,” the businessperson said.
“Prices of almost everything are increasing.”
Overall, consumer inflation was 5.7 percent last month, while service inflation was 6.4 percent, a two-decade-plus high.
Among services, the cost of dining out rose by 8.9 percent on year. Jjajangmyeon is up 13.2 percent, kimbap 13.0 percent and hamburgers 12.0 percent. The rising price of wheat especially is putting pressure on restaurants and fast food joints.
The price of laundry was up 11 percent last month on year, sauna fees 10.6 percent and the price of a haircut 5.8 percent.
Domestic travel was up 26.0 percent.
In services, car insurance prices fell, and examination fees and financial commissions were unchanged on year.
The accumulative effect of the continuous raise in prices of processed goods was another contributing factor. Labor shortages also yielded higher labor costs, which also contributed to higher prices.
The prices of services are considered a significant factor in deciding whether inflation will likely continue or not, as these prices tend not to fall easily once they increase.
The consumer price index in the United States rose 7.7 percent year-on-year in October, dropping below 8 percent for the first time in about eight months.
“The continuous inflation that begins with raw ingredients and oil eventually influences personal service fees at the end,” said Kang Sung-jin, an economics professor at Korea University.
“The government needs to make efforts so that the continuous inflation will not lead to lingering inflation in services and to additional price hikes.”
Import prices in Korea rose 19.8 percent in October due to the strong dollar and higher energy prices, according to the Bank of Korea Tuesday.
The figure rose 1.5 percent compared to the previous month, following a 3.4 percent rise on month in September.
Import prices of raw materials rose 33.7 percent on year in October and those of intermediate goods 13.9 percent as prices for coal and petroleum rose, according to the data.
The Bank of Korea cited the rise in crude oil prices and the fall of the local currency against the dollar as factors contributing to the higher import prices.
The average price of Dubai oil rose 0.2 percent to 91.16 dollars per barrel on month in October. This was a 19.8 percent year-on-year increase.
BY CHO JUNG-WOO, JEONG JIN-HO [firstname.lastname@example.org]