Korea's consumer price growth hits 21-month low in June

A customer shops for groceries at a supermarket in Seoul on Sunday. [YONHAP]

Korea's consumer price growth dipped below 3 percent in June for the first time in 21 months as the index maintained a downward trajectory due to the falling prices in petroleum products and foods.

Consumer prices, a key gauge of inflation, rose 2.7 percent in June from a year earlier, compared with a 3.3 percent increase tallied in May, according to a Statistics Korea report Tuesday.

It also marked the first time for the on-year growth in consumer prices to fall below 3 percent since September 2021.

Prices of fuel products plunged 25.4 percent compared to the same period of last year, hitting a record low since the statistics agency began compiling the data in 1985.

Prices of services gained 3.3 percent due to higher insurance and housing management costs. International flight tickets, on the other hand, shed 11.3 percent.

"The overall growth in consumer prices fell to the 2 percent level on the back of falling fuel costs and the slowing growth rate of the service sector," an agency official said.

Prices of daily necessities — 144 items closely related to people's everyday lives, such as food, clothing and housing, as designated by the Finance Ministry — climbed 2.3 percent on-year in June, compared with a 3.2 percent rise in May.

However, utility service prices continued to grow sharply, advancing 25.9 percent over the period, as the state-run Korea Electric Power Corporation raised its bills due to fluctuations in global energy prices.

South Korea depends heavily on imports for its energy needs.

The prices of agricultural, fisheries and livestock products edged up 0.2 percent, following higher costs of apples and chicken, which rose 11.1 percent and 13.7 percent, respectively.

Prices of pork and beef, on the other hand, lost ground on year in June, decreasing 7.2 percent and 5.1 percent, respectively.

Core inflation, which excludes volatile agricultural and energy prices, registered 4.1 percent, the lowest since May last year.

The central bank held the benchmark interest rate steady for the third straight time in May at 3.5 percent due to easing inflationary pressure amid rising concerns over an economic slowdown. Previously, the bank delivered seven consecutive hikes in borrowing costs from April 2022 to January 2023.

BY PARK EUN-JEE, YONHAP [park.eunjee@joongang.co.kr]