This Year's Inflation Rate Confirmed to Be in the '5% Range' for the First Time Since the Foreign Exchange Crisis

Highest Annual Rate Since the Foreign Exchange Crisis
September Water Price Increase Rate 5.6%... Slowing Upward Trend Since July

[Asia Economy Sejong=Reporter Son Seon-hee] Last month, the consumer price inflation rate recorded the mid-5% range, continuing its slowdown for the second consecutive month. The main factor was the decline in international oil prices since the second half of the year. However, the annual inflation rate for this year is expected to remain in the 5% range. This is the highest annual inflation rate since the 1998 foreign exchange crisis (7.5%).

According to the 'September Consumer Price Trends' released by Statistics Korea on the 5th, the consumer price index last month was 108.93 (2020=100), up 5.6% compared to the same month last year. The inflation rate narrowed for two consecutive months following 6.3% in July and 5.7% in August.

The recent slowdown in inflation is mainly attributed to external factors such as international oil prices. International oil prices, which soared to $120 per barrel last summer, have recently fallen to the $80 range amid growing concerns about economic slowdown. Eo Un-seon, Director of Economic Trend Statistics at Statistics Korea, said, "The most significant factor in the slowdown of the steep inflation rise was the deceleration in petroleum product prices."

Core inflation, which excludes agricultural products and petroleum products and shows the underlying trend of prices, rose 4.5%, expanding from 4.4% in the previous month. The index excluding food and energy also increased by 4.1%, a larger rise than the 4.0% recorded in the previous month. In particular, dining-out prices jumped by 9.0%, marking the largest increase in about 30 years. Excluding external factors that greatly affect overall consumer prices, inflationary pressure is still ongoing.

The cumulative inflation rate up to September is 5.0%. With scheduled increases in electricity and city gas rates this month and a rising exchange rate, there are considerable upward factors, making an annual inflation rate in the 5% range certain. This is the highest level since 1998 (7.5%) and even higher than during the 2008 financial crisis (4.7%).