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Consumer price inflation in October rises to 5.7%

Posted November. 03, 2022 07:32,   

Updated November. 03, 2022 07:32


Consumer price inflation in October climbed to 5.7%, recording a month-to-month growth for the first time in three months. Price increases of oil and agricultural products, which had previously driven prices, had flattened, but public utility prices, including power and city gas, saw the highest increase ever.

Statistics Korea announced on Wednesday that the consumer inflation index of Korea rose to 109.21 (100 in the year 2020), a 5.7% rise from the previous year. The increase, which had slowed down in August (5.7%) and September (5.6%) after reaching a peak in July (6.3%), started to widen again in October.

The October increase was driven by a price hike in public utility prices. Power, city gas, and water bills jumped by 23.1% from last year, showing the largest increase since statistical recording in 2010. Source price, which excludes prices of energy, food, and other high-fluctuation items, rose 4.8% compared to the previous year, recording the highest increase in 13 years and eight months since February 2009 (at 5.2%). The price of processed foods rose 9.5% year-on-year, driven by higher raw material prices.

The price increase rates of energy and agricultural products, which had historically driven prices, had slowed. Prices of oil increased by 10.7% from the previous year, lower than in July (35.1%), August (19.7%), and September (16.6%). Prices of agricultural produce also rose 5.2% year-on-year, which was lower than that of September at 6.2%.

The government predicts that the 5% inflation rate will persist throughout the year. “We are expecting that the inflation rate would not reach 6%, so July might have been the peak period,” said Eo Yoon-sun, a commissioner at Statistics Korea. Vice President Lee Seung-heon of the Bank of Korea also forecasted that consumer prices would continue growth rate in the higher 5% range until the first quarter of next year. As high inflation stays in place, there are rising expectations on the Monetary Policy Committee to take another big step (raising the key interest rate by 0.5 percentage points) on November 24.

Hye-Ryung Choi herstory@donga.com · Min-Woo Park minwoo@donga.com