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CPI climbs at fastest pace in June as processed food price surge continues

Published: 02 Jul. 2025, 18:13 Updated: 02 Jul. 2025, 18:51

Ramyeon (instant noodle) products are displayed at a retail market in Seoul on July 2. [NEWS1]

Korea’s consumer price index (CPI) rose at its fastest pace this year in June, driven largely by increases in processed food prices that began late last year and continued through the first half of this year.

According to Statistics Korea on Wednesday, the CPI for June stood at 116.31, with 2020 as the base year of 100, up 2.2 percent from a year earlier — exceeding the Bank of Korea’s inflation target of 2.0 percent. Monthly inflation had eased from 2.2 percent in January to 1.9 percent in May but rebounded last month to match the January high.

The cost of living felt by consumers may have been even steeper. The living necessities index — which tracks 144 frequently purchased items out of a total of 458 — rose by 2.5 percent from a year earlier.

Processed food prices led the rise, climbing by 4.6 percent, the highest increase in 19 months. Among 73 processed food items, 62 recorded price increases.

Dried squid jumped by 48.7 percent, followed by sauces at 21.3 percent, tea at 20.7 percent, chocolate at 20.4 percent, probiotics at 14.5 percent, gochujang and kimchi both at 14.2 percent, coffee at 12.4 percent, jam at 12.0 percent and cereal at 11.6 percent.

Ramyeon, which President Lee Jae Myung recently singled out for public concern, rose by 6.9 percent — its steepest increase in 21 months. The overall spike in processed food prices resulted from a series of shipping price hikes by food manufacturers grappling with rising raw material costs and political instability since December last year.

President Lee Jae Myung speaks at a Cabinet meeting held on July 1 at the presidential office in Yongsan, central Seoul. [PRESIDENTIAL OFFICE]

Among agricultural, livestock and fishery products, seafood prices rose by 7.4 percent, influenced in part by rising sea temperatures.

Mackerel increased by 16.1 percent, oysters by 12.7 percent, croaker by 10.6 percent, shrimp by 10.5 percent and dried seaweed by 10.4 percent. Among livestock items, eggs rose by 6.0 percent, followed by chicken at 5.4 percent, honey at 5.0 percent, imported beef at 4.5 percent and pork at 4.4 percent.

The increase in egg prices was the highest in 3 years and 5 months. The Fair Trade Commission is investigating whether price collusion at the production level may have contributed to the spike.

Among agricultural products, garlic rose by 24.9 percent, zucchini by 19.9 percent, cucumber by 19.1 percent, water parsley by 15.8 percent and eggplant by 10.3 percent. These increases were attributed to reduced supply resulting from extreme weather and a decrease in cultivation area.

The overall index was also pushed higher by a turnaround in petroleum prices. After declining in April and May, petroleum prices rose by 0.3 percent in June, partly due to tensions in the Middle East following clashes between Israel and Iran.

Utility bills also increased. Electricity, gas and water fees rose by 3.1 percent. District heating charges surged by 9.8 percent, city gas by 6.9 percent and tap water fees by 3.6 percent. In the service sector, both dining out and non-dining personal services recorded increases in the 3 percent range — 3.1 and 3.5 percent, respectively.

A customer looks at eggs at a retail store in Seoul on June 26. [YONHAP]

There was some positive news. The core inflation index — which excludes food and energy and better reflects the underlying trend — remained stable at 2.0 percent in both May and June, after holding in the upper 1 percent range from January through March.

"If international oil prices and the exchange rate remain stable this month, the rise in consumer prices may slow," said Bank of Korea Senior Deputy Gov. Kim Woong. "Inflation is expected to hover around the 2 percent level moving forward."

The government said it will make every effort to stabilize prices that are most directly felt by consumers.

"The government will continue food discount programs, apply reduced or zero tariffs on major food imports and respond quickly to changes in supply and demand for key items," said an official from the Ministry of Economy and Finance.

"The government has to simplify Korea’s complex distribution network and lower import barriers to diversify supply channels," said Jung Kyu-chul, senior fellow at the Department of Macroeconomics and Financial Policies at the Korea Development Institute.

Kim Jung-sik, emeritus professor of economics at Yonsei University, cautioned that excessively expansionary fiscal policy "could undermine the country’s fiscal soundness and further stoke inflation."

Translated from the JoongAng Ilbo using generative AI and edited by Korea JoongAng Daily staff.
BY KIM MIN-JOONG [[email protected]]