Consumer Prices Remain in 0% Range for 4 Consecutive Months
Government: "Expanding Supply of Key Seasonal Goods to Prevent Increased Burden Before Seollal"
[Asia Economy Reporters Jang Sehee and Moon Chaeseok] Consumer prices rose by 0.6% last month. The inflation rate has remained in the 0% range for four consecutive months since October last year.
According to the Consumer Price Trends report from Statistics Korea on the 2nd, the Consumer Price Index (CPI) for January was 106.47 (2015=100), up 0.6% compared to the same month last year. The consumer price inflation rate was in the 1.0% range in September last year but dropped sharply to 0.1% in October. It then recorded 0.6% and 0.5% in November and December, respectively.
Despite the low inflation trend, food prices, which greatly affect consumer perception, rose significantly. Fresh food prices increased by 9.2% last month. Although this is a slowdown from the previous month’s 10.0%, it remains at a high level.
Prices of agricultural, livestock, and fishery products also rose by 10.0%. This is attributed to poor crop yields and increased demand for agricultural products due to social distancing measures. In particular, prices of apples (45.5%) and onions (60.3%) rose sharply.
The living cost index, which reflects perceived inflation focusing on 141 items with high purchase frequency and expenditure share, rose by 0.3% compared to a year ago, marking an upward trend after four months. The living cost index showed negative growth for three consecutive months last year: -0.7% in October, -0.1% in November, and -0.1% in December.
The core inflation index, which excludes seasonal factors and temporary shocks such as agricultural products and petroleum to capture long-term trends, rose by 0.9% compared to a year ago, maintaining a 0% range inflation rate for two consecutive months. The index excluding food and energy rose by only 0.4% compared to the previous year, maintaining the 0% range for 1 year and 11 months since February 2019 (1.1%).
Meanwhile, with inflation remaining in the 0% range for four consecutive months, it is being evaluated as 'low inflation.' The government and the Bank of Korea have set a consumer price inflation target of 2% for price stability.
Regarding this, Kim Yongbeom, First Vice Minister of Strategy and Finance, said, "Consumer prices in January rose due to poor crop yields and the spread of highly pathogenic avian influenza (AI), which increased prices of agricultural, livestock, and fishery products." He added, "As a result, the month-on-month consumer price increase slightly expanded." In response, the government plans to expand the supply of key seasonal products ahead of the Lunar New Year to prevent increased price burdens on low-income households and will apply measures such as tariff quotas on eggs.
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