Oil price hike to prod inflation in 2H

As international oil prices move beyond US$30 per barrel, oil costs are fast becoming become the greatest concern in terms of inflation for the second half of this year.

In particular, considering only 20% of the oil price increase was reflected in petroleum prices, if oil prices rise in the second half, further price increases for diesel, petrol and kerosene are inevitable.

According to an analysis performed by the Bank of Korea, the surge in oil prices during the first half accounted for 48% of the rise in consumer prices (1.5%) and 113% of the production price jump (2.0%), making it the foremost agitator of inflation.

Despite the fact that international oil prices rose 87.1% year on year, petroleum prices only went up by 19.1%. In order to contain inflation, the government did not reflect the oil price hike in market products, but increased oil prices contributed to half the rise in consumer prices nonetheless.