South Korea Inflation Rises to 3.1% in August on Fuel, Mobile Fees

South Korea's consumer prices moved up 3.1 per cent in August from a year earlier as oil prices remained elevated, along with higher mobile service subscription charges due to a low base effect from large-scale discounts offered last year following a hacking incident, data showed on Wednesday. According to data from the Ministry of Data and Statistics, consumer price growth reached above 3 percent in August, accelerating from a 2.8 percent on-year rise in July.

The consumer price increase came to 3.1 percent and 3.2 percent in May and June, respectively, reports Yonhap news agency. The latest figures came as oil prices remained elevated by moving up 14.2 percent on-year in August, although the growth slowed from 15.6 percent posted in July. Oil prices contributed 0.54 percentage point of the on-year consumer price growth in August, down from 0.6 percentage point posted in July.

In August, diesel prices rose sharply by 19.6 percent and gasoline prices advanced 11.5 percent. South Korea relies heavily on imports to meet its energy needs. The increase was also partly driven by a 26.7 percent rise in mobile phone service charges, reflecting a low base from a year earlier, when SK Telecom Co. offered large-scale discounts following a data breach. The data ministry suggested that without the mobile bill-related factor, the consumer price hike for August was estimated at 2.5 percent.

Core inflation, which excludes volatile food and energy prices, also advanced 3.4 percent on-year in August. It was the highest level since 3.8 percent posted in May 2023. The report showed that prices of overall industrial products rose 3.7 percent from a year earlier in August. Prices of agricultural, livestock and fishery products, on the other hand, fell 2.6 percent, led by lower prices of napa cabbage and tomatoes.

The data ministry attributed the decrease to the government-led discount events along with an increase in the supply of major produce. The report showed that prices of imported beef and domestically produced beef rose 6.2 percent and 3.3 percent, respectively. Prices in the service sector rose 3.7 percent, led by higher insurance premiums and overseas package tour prices, which increased 13.4 percent and 14.9 percent, respectively. Prices of electricity, gas and water rose 0.4 percent over the period.

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