Seoul: South Korea's consumer prices have seen a significant increase, rising more than 3 percent year-on-year for two consecutive months in June, underscoring the ongoing impact of the Middle East conflict on global supply chains and oil prices, as reported on Thursday.
According to Yonhap News Agency, data from the Ministry of Data and Statistics revealed that consumer prices, which serve as a key measure of inflation, climbed 3.2 percent in June compared to the previous year. This marks the sharpest hike since December 2023, when the increase was at a similar level. Industrial product prices surged 4.4 percent, largely driven by escalating fuel costs. The ministry highlighted that fuel prices soared 24.7 percent, accounting for a 0.93 percentage point contribution to the overall rise in consumer prices. This growth was the steepest since a 35.2 percent increase recorded in July 2022.
Specifically, gasoline prices rose by 23.1 percent, and diesel prices saw an increase of 33.7 percent, reflecting South Korea's heavy reliance on energy imports. Agricultural and fishery product prices increased by 3.2 percent, with domestic beef and rice prices rising by 7.5 percent and 11.7 percent, respectively. The price of green onions, a staple in Korean cuisine, surged by 37.1 percent due to reduced cultivation areas and heatwave impacts on growth.
Service prices experienced a 2.6 percent increase from the previous year, with the public and private sectors seeing advancements of 1.6 percent and 3.4 percent, respectively. The private sector's increase reached 3.9 percent when excluding dining-out services. Additionally, international flight ticket prices jumped 28.2 percent. Core inflation, which excludes volatile food and energy prices, rose 2.5 percent year-on-year in June.
The Ministry of Finance and Economy noted that the government's fuel price cap system, introduced in March, helped limit consumer price growth to 3.2 percent, suggesting that inflation could have reached 3.6 percent without this measure. The central bank anticipates a moderation in consumer price growth in July, citing governmental efforts to curb inflation.
Deputy Gov. Lee Ji-ho noted that consumer prices in June continued to rise from May due to sustained high petroleum product prices and accelerated increases in agricultural product prices. He projected that inflation would remain elevated due to demand-side pressures stemming from economic growth, despite lower crude oil prices' downward pressure.
Regarding the weak Korean won, a finance ministry official stated that recent foreign exchange volatility has yet to impact consumer prices, with potential effects anticipated in the second half of the year. The official also mentioned that cash handouts aimed at alleviating the burden of soaring fuel prices are unlikely to exert significant inflationary pressure.
First Vice Finance Minister Lee Hyoung-il, during a meeting with related ministries, emphasized efforts to maintain inflation around 3 percent in the latter half of 2026. South Korea has announced plans for discount events at local retail stores in July and August, along with importing additional eggs to manage inflation. Lee also noted that related ministries would intensify on-site inspections to ensure that all measures contribute to stabilizing consumer prices.