Korea's inflation slows to 1.6% in September, first drop below 2% in more than 3 years

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Korea's inflation slows to 1.6% in September, first drop below 2% in more than 3 years

Published: 02 Oct. 2024, 08:29 Updated: 02 Oct. 2024, 20:36

SHIN HA-NEE
shin.hanee@joongang.co.kr

Audio report: written by reporters, read by AI

The prices of gasoline and diesel are displayed at a gas station in Seoul on Sept. 29. The decline in fuel prices led the overall slowdown in inflation in September. The consumer price index rose 1.6 percent on year last month, Statistics Korea said Wednesday. [NEWS1]

Korea’s inflation fell below the 2.0 percent mark for the first time in more than three years in September primarily due to lower fuel prices.

The significant deceleration may further strengthen the case for an interest-rate cut at the upcoming Monetary Policy Board meeting on Oct. 11.

The consumer price index (CPI), a key measure of inflation, rose 1.6 percent on year last month, according to data Statistics Korea released Wednesday.

September marked the first time a yearly CPI increase has fallen in the 1 percent range since March 2021 when on-year inflation was 1.9 percent. It also marked its slowest pace since the 1.4 percent recorded in February 2021.

Headline inflation slowed for the third consecutive month in September, having risen 2 percent in August and 2.6 percent in July.

Consumer prices rose 0.1 percent on a monthly basis.

The Bank of Korea attributed the deceleration to a steep fall in global fuel prices and said that the cool-down “is further solidifying the grounds for a consumer price stabilization.” The prices of petroleum products declined 7.6 percent on year in September,

“The growth in consumer prices is expected to remain below the 2 percent mark for a while, before [inching up to] hover around 2 percent, due to the base effect, as we move toward the end of the year,” the Korean central bank said in a release.

“However, uncertainties regarding global fuel prices remain significant due to the ongoing conflict in the Middle East,” the bank added.

Agricultural, marine and livestock product prices rose 2.3 percent last month, relatively mild growth compared to the 2.4 percent increase seen in August and 5.5 percent seen in July. Despite a recent surge in vegetable prices, a significant drop in those of fruit partly offset the growth.

Vegetables are displayed for sale at a discount mart in Seoul on Wednesday. Prices of vegetables, including white cabbages, significantly rose by double digits on year despite the overall slowdown in headline inflation in September, according to Statistics Korea's data on Wednesday. [YONHAP]

While the prices of white cabbages rose 53.6 percent on year due to the heat wave and heavy rainfall during the summer, the prices of apples and peaches dipped 4.8 percent and 20.3 percent thanks to this year’s good harvest.

As such, the fresh food price index rose 3.4 percent on year, inching up from the previous month’s 3.2 percent, with fresh vegetable prices rising 11.6 percent. The index rose 3.8 percent on a monthly basis.

Core inflation, which excludes volatile food and energy prices, edged down to 2.0 percent from the 2.1 percent seen in August.

The cost of living index, which tracks the price changes of 144 frequently purchased consumer goods and services, rose 1.5 percent, marking its lowest growth since the 0.8 percent rise logged in January 2021 and a continued deceleration from the previous month's 2.1 percent on-year jump.

“The government will do its best to stabilize consumer prices amid persisting uncertainties, including growing volatility in global fuel prices and potential agricultural price hikes due to abnormal weather conditions,” said the Ministry of Economy and Finance in a release.

Updated, Oct. 2: Added additional information about agricultural and petroleum product prices and statements from the Bank of Korea and Finance Ministry.

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