KDI "Consumer Prices Hit Harder by 'Heavy Rain' than 'Heatwave'"

More Sensitive to 'Gangsurlyang' than 'Gion'
Consumer Prices Increase by 0.09%P
When Summer Gangsurlyang Rises by 100mm

Seunghee Lee, a research fellow at the Korea Development Institute (KDI) Economic Outlook Office, is explaining the impact of changing weather conditions on inflation and its implications on the morning of the 9th at the Government Complex Sejong.
[Image source=Yonhap News]

A study has found that among abnormal weather conditions, summer rainfall has a strong impact on consumer prices.

On the 9th, Seunghee Lee, a research fellow at the Economic Outlook Office of the Korea Development Institute (KDI), announced in the current issue analysis "The Impact of Changes in Weather Conditions on Prices and Implications" that if rainfall increases or decreases by 100mm compared to past trends, prices rose by 0.07 percentage points. This study analyzed the impact on prices by using the differences in temperature and rainfall compared to past trends over 20 years from January 2003 to December last year.

Rainfall, especially in summer, influenced consumer prices depending on the trend. When summer rainfall increased by 100mm compared to past trends, the consumer price inflation rate rose by 0.09 percentage points in the short term. Conversely, if it decreased by 100mm compared to past trends, the inflation rate was confirmed to increase by 0.08 percentage points.

On the other hand, temperature had less impact on prices compared to rainfall. When the temperature rose or fell by 10 degrees compared to past trends, the consumer price inflation rate increased by 0.04 percentage points. However, unlike rainfall, abnormally high or low summer temperatures did not affect prices.

The overall weather impact on prices was mostly through the rise in fresh food prices, and the influence on core prices was found to be minimal. Both temperature and rainfall affected consumer prices with a lag of 1 to 2 months, and the impact was found to be short-term.

The research fellow said, "Due to global warming, summer temperatures are rising, and as a result, weather conditions such as heavy rains and droughts are changing frequently, with the possibility of increased intensity of these changes," adding, "There is a possibility that short-term price instability, especially centered on fresh food, will occur more frequently."