Consumer Inflation Rises to 5.9 Pct. in July

Consumer prices soared to nearly six percent last month, the biggest rise in nine years and seven months.

According to a report released by the National Statistical Office yesterday, consumer inflation reached a whopping 5.9 percent last month year-on-year.

The rise is the biggest since November 1998, when consumer inflation shot up to 6.8 percent. More worrying, however, is that inflation is likely to exceed six percent this month.

The main factor behind the surge in consumer prices was the soaring prices of international oil and agricultural products.

The report said surging international oil prices have raised consumer inflation 2.02 percentage points, and that higher airfares and travel expenses contributed another 1.73 percentage points.

With the fall of international oil prices from mid-July, however, inflation of oil products reached a mere 1.7 percent from June, slowing from the month-on-month increase of 7.7 percent two months ago.

Also in July, the supply of agricultural products decreased in the wake of heavy rainfall and a heat wave. This caused major price hikes for young radishes (34.8 percent), spinach (24.2 percent) and watermelons (10.7 percent).

Among 52 commodities subject to government price controls, the prices of 26 items jumped from June, including onions (10.8 percent) and milk (10.5 percent). Those of 16 commodities remained unchanged and ten saw prices go down last month.

To encourage cooperation in price stability, the Strategy and Finance Ministry will hold a joint conference to that end with the private sector. Participants will include officials from the Bank of Korea, the Korea Consumer Agency, the Korea Chamber of Commerce and Industry and the Korea National Council of Consumer Organizations.

A ministry source said, “At the conference, we’ll discuss measures to preemptively deal with price uncertainty by analyzing all related processes of import, production, distribution and consumption.”

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