Seoul: South Korea's consumer prices increased by 2.8 percent in July compared to the previous year as oil prices remained high, albeit at a slower rate of increase, marking the first time in three months that inflation fell below the 3 percent threshold.
According to Yonhap News Agency, the inflation rate slowed down from the 3.1 percent and 3.2 percent year-on-year increases recorded in May and June, respectively. The stabilization of oil prices contributed to the deceleration in consumer price growth, although they were still notably high compared to 2025 levels.
The report indicated that oil product prices rose 15.5 percent year-on-year in July, a decline from the 24.7 percent increase seen in June. Oil prices contributed to 0.6 percentage points of the consumer price growth in July, compared to 0.93 percentage points in June, with diesel and gasoline prices, in particular, remaining elevated at 21.5 percent and 12.6 percent rises, respectively.
Overall industrial product prices increased by 3.7 percent from the previous year, with notable rises in the prices of computers and mobile devices by 25.1 percent and 22.5 percent, respectively, due to higher chip prices. Prices of agricultural, livestock, and fishery products went up by 0.9 percent, driven by higher beef and rice prices, although agricultural product prices alone fell by 2.2 percent year-on-year.
Lee Doo-won, a senior statistics official, noted that while agricultural product prices typically rise in July and August due to heat waves, increased production and shipment last month helped stabilize prices. Government promotional events for agricultural and livestock products also played a role in the July data.
Service prices rose 2.6 percent year-on-year, driven by higher insurance costs, which increased by 13.4 percent. International airfares and overseas travel packages saw significant rises of 21.7 percent and 20 percent, respectively. Core inflation, excluding volatile food and energy prices, also grew by 2.6 percent compared to July last year, marking the sharpest increase since December 2023's 2.8 percent growth.
First Vice Finance Minister Lee Hyoung-il chaired a meeting on inflation with relevant ministries, emphasizing that the slowdown in consumer price growth reflected the government's efforts, such as implementing price caps on fuel products. The price cap system was introduced in March to stabilize domestic fuel prices amid global energy market volatility. The government lowered the price caps in late June, citing easing geopolitical tensions in the Middle East, which the finance ministry estimated reduced July's consumer price growth by about 0.3 percentage points.
Despite the slowdown, the first vice finance minister acknowledged that the burden on people's livelihoods remains significant due to the cumulative impact of previous price increases. He urged all ministries to make concerted efforts to address inflation risks, including geopolitical uncertainties in the Middle East and the recent heat waves' effects.