Inflation Stays in the 3% Range for Two Months... "Downward Trend Expected for the Time Being"

Last month, the consumer price inflation rate recorded 3.3%, marking a consecutive two-month rise in the 3% range. The Statistics Korea forecasts a downward stabilization trend for the time being.

On the 2nd, Statistics Korea announced the "May 2023 Consumer Price Trends" report containing these details.

According to the report, last month's consumer prices rose 3.3% compared to the same period last year. This is the lowest in 1 year and 7 months since September 2021 (3.2%).

The fresh food index increased by 3.5% year-on-year. Fresh fish and seafood rose by 6.3%, fresh vegetables by 7.0%, but fresh fruits fell by 1.4%.

By expenditure purpose, compared to the same month last year, housing, water, electricity, and fuel (5.9%), food and accommodation (7.0%), food and non-alcoholic beverages (3.9%), clothing and footwear (8.0%), other goods and services (6.4%), household goods and household services (6.0%), recreation and culture (3.8%), education (2.2%), health (1.6%), communication (0.9%), and alcoholic beverages and tobacco (0.2%) all increased.

Transportation prices are influenced by gasoline, diesel, and petroleum, with the recently stabilized international oil prices cited as the main reason for the decline. Additionally, the fuel tax reduction measure, which was scheduled to end at the end of April, was extended until the end of August, further increasing the decline.

On the other hand, electricity, gas, and water prices still remained high, rising 23.2% year-on-year. Compared to the previous month, they also increased by 2.2%. This is analyzed as the effect of the electricity rate increase of 8 KRW per kWh and the gas rate increase of 1.04 KRW per MJ on the 15th of last month. Statistics Korea expects about a 2% month-on-month increase next month as the electricity rate hike is reflected over May and June.

The overall downward trend in prices is expected to continue for the time being. Kim Bo-kyung, Economic Trend Statistics Officer at Statistics Korea, said, "There is a high possibility that the (price) figures will decrease for about two to three months due to the base effect," adding, "Unless there are unusual factors such as international oil prices, exchange rates, or raw material price trends, a stable trend is expected for the time being."

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