Korea reports 4.2 percent inflation in March, a one-year low

A grocery store in Seoul on Tuesday. Consumer price last month grew 4.2 percent year-on-year, which is the slowest in a year. However, fresh produce prices continued to rise sharply. [YONHAP]

Inflation hit a one-year low in March and was slightly under expectations as petroleum prices plummeted, taking some pressure off the central bank, which has been raising rates to keep prices under control.

Consumer prices rose 4.2 percent year-on-year in March, according to Statistics Korea Tuesday, down from the 4.8 percent increase reported in February and the lowest since the 4.1 percent year-on-year increase in March 2022.

Petroleum prices last month dropped 14.2 percent on year. That is the sharpest year-on-year decline since November 2020, when they fell nearly 15 percent.

In part due to the falling petroleum prices, manufactured goods price increases slowed last month.

Prices of manufactured goods were up 2.9 percent year-on-year. That's the slowest year-on-year increase since August 2021 and about half the 5.1 percent year-on-year increase reported in February.

Heavy increases were reported in some categories. Utility bills were up 28.4 percent.

Fresh produce prices rose 7.3 percent on year, nearly double the 3.6 percent reported in February and the sharpest year-on-year growth since October last year when fresh produce prices increased 11.4 percent.

Vegetable prices were up nearly 14 percent. Onion prices surged 60 percent, while green pepper prices were up 46.2 percent. Cucumber prices were up 32 percent. Pork prices were up 2.4 percent.

Korean beef prices fell 6.1 percent. Imported beef prices fell 7 percent.

Rice prices fell 7.8 percent.

The cost of eating out was up 7.4 percent, down from February's 7.5 percent.

"Inflation has been easing since the second half of last year," Kim Bo-kyung, deputy director for short-term economic statistics, said. "It is likely that consumer prices will stabilize more as we head toward the second half."

Kim said that public utility bills and international raw material prices, including crude oil prices and the prices of services, are still uncertain factors that could affect inflation in the second half.

On March 2, the OPEC members announced a 1.16 million barrel reduction in daily production starting May. Russia is cutting production by 500,000 barrels a day through the end of the year.

Crude prices are up 6 percent since the announcement, the sharpest rise since April 2022.

Due to increasing deficits reported by energy companies, the People Power Party is pushing the government not to raise utility bills further.

The Ministry of Trade, Industry and Energy on Sunday was planning to meet with the energy companies. The meeting was canceled just an hour before the meeting.

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