Korea's inflation slows to 2.7% in May

A person shops for vegetables at a discount mart in Seoul on Tuesday. [NEWS1]

Korea’s inflation edged down in May, remaining in the 2 percent range for the second consecutive month.

Fruit prices, however, continued to soar at a steep pace, and petroleum products extended their upturn as well.

The consumer price index, a barometer of inflation, rose 2.7 percent from a year prior in May, according to the latest data from Statistics Korea released on Tuesday. The on-year increase decelerated for the second month in a row.

Inflation fell below the 3 percent mark for the first time in six months in January, only to rebound to 3.1 percent in February and March before once again falling to 2.9 percent in April.

The cost-of-living index, which tracks the price changes of 144 types of frequently purchased consumer goods and services, rose 3.1 percent, a milder pace compared to the previous month’s on-year gain of 3.5 percent.

Core inflation, which excludes volatile food and energy prices, grew 2.2 percent in May, also decelerating from a 2.3 percent gain in April.

“The increase in consumer prices and core inflation continued to slow in May compared to the previous month,” said Bank of Korea (BOK) Deputy Gov. Kim Woong during an inflation-monitoring meeting held at the central bank on Tuesday.

“Considering the recent slowdown in the growth of global oil prices and agricultural products, inflation is expected to gradually decelerate, as previously projected [by the BOK] in May,” he added.

While agricultural products continued to witness rapid on-year growth last month at 19 percent, they did inch down by 2.5 percent compared to the previous month thanks to favorable weather conditions.

The on-year increase stood at 20.3 percent in April, and 20.5 percent in March.

Fruit prices, in particular, continued to see a steep increase, with pears rising a record 126.3 percent and apples, 80.4 percent.

The prices of industrial products grew 2.1 percent on a yearly basis. Among those, petroleum products logged a 3.1 percent increase, up from 1.3 percent in April, extending gains for the third consecutive month despite the recent downturn in global crude prices, mainly due to the base effect from the previous year's prices. Petroleum product price growth was the steepest since 4.1 percent in January last year.

The utility sector — including water, gas and electricity — saw a 2.7 percent rise, compared to a 4.9 percent jump in April, while the service sector climbed 2.3 percent.

The central bank expects Korea's inflation to come in at 2.6 percent this year. In the first quarter, the figure was 2.8 percent.

BY SHIN HA-NEE [shin.hanee@joongang.co.kr]