"August Inflation Rate Slows as Expected
Temporary Telecom Fee Discounts Cited;
September Rate Likely to Rise to Around 2%"
"The slowdown in the August consumer price inflation rate was expected, driven by the temporary discount on telecommunications fees. The rate is expected to rise to around 2% in September."
Kim Woong, Deputy Governor of the Bank of Korea, stated this during a price situation review meeting held at the Bank of Korea in Jung-gu, Seoul on September 2. The consumer price index for August was 116.45 (2020=100), up 1.7% from a year earlier. Although prices of agricultural, livestock, and fisheries products rose significantly due to heavy rainfall and heatwaves, the increase was 0.4 percentage points lower than in July (2.1%) because of the anticipated temporary discount on telecommunications fees.
Deputy Governor Kim predicted, "The inflation rate in September is expected to rise to around 2% as the temporary downward factors disappear." He added that although this is higher compared to the brief slowdown in August, it is in line with the Bank of Korea's price stability target of 2.0%. He also forecasted, "Going forward, consumer prices are expected to continue rising at around 2% for the time being, considering factors such as rising agricultural, livestock, and fisheries prices, weak demand pressure, and stable international oil prices."
Meanwhile, both the consumer price and core inflation rates last month fell sharply to 1.7% and 1.3%, respectively, mainly due to temporary factors. While agricultural, livestock, and fisheries products (2.1% in July → 4.8% in August) saw a wider increase due to the impact of heavy rainfall and heatwaves, mobile phone charges (0.0% → -21.0%, contribution -0.6 percentage points) dropped sharply due to a temporary discount by some mobile carriers.
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