May Consumer Prices Rise 3.1%... Highest in 26 Months Due to Middle East War Impact (Comprehensive)

Oil Product Prices Up 24% Year-on-Year
Agricultural, Livestock, and Fisheries Products Reverse Course, Now Climbing
Perceived Inflation Higher Than Headline Rate... Living Necessities Price Index Rises 3.3%

In May, the consumer price index (CPI) rose by 3.1% compared to a year earlier, marking the sharpest increase in 26 months. Oil product prices surged by 24% due to the aftermath of the Middle East war, pushing up overall inflation by nearly 1 percentage point. Prices of services and agricultural, livestock, and fisheries products also climbed across the board, intensifying inflationary pressure on everyday life.

Due to the tough remarks by U.S. President Donald Trump, international oil prices soared, and on the 3rd, a gasoline and diesel price notice was placed at a gas station in Yongsan-gu, Seoul. 2026.04.03 Photo by Dongjoo Yoon

According to the “Consumer Price Trends for May,” released by the Ministry of Data and Statistics on June 2, the consumer price index last month was 119.92 (2020=100), up 3.1% from the same month last year. This is the biggest increase since March 2024 (3.1%). The main driver of inflation was the sharp rise in oil product prices following the increase in international oil prices. Oil product prices jumped by 24.2%, contributing 0.92 percentage point to the overall inflation rate. This is the highest figure in three years and ten months since July 2022 (35.2%), at the outset of the Russia-Ukraine war. As a result, the overall price of industrial goods rose by 4.2%, contributing 1.40 percentage points to the total inflation rate. An official from the Ministry of Economy and Finance commented, “If there had been no cap on oil prices or reduction in fuel taxes, inflation in May would have been estimated at 3.7%.”

Service prices also rose by 2.8%, contributing 1.56 percentage points to overall inflation. With an increase in fuel surcharges, international airfare soared by 33.5%—the largest jump since statistics began in 1995. Lee Dowoon, Director of Economic Trends Statistics at the Ministry of Data and Statistics, explained, “In addition to the impact of rising international oil prices, increased travel demand during the May holidays expanded the rise in service prices.” Even agricultural, livestock, and fisheries product prices, which had been declining for two consecutive months, rose by 2.2%, further intensifying cost-of-living pressures. This turnaround is attributed to the base effect from last year’s price drop and a decrease in shipments of some crops due to high temperatures, resulting in a rise after two months of declines.

Perceived inflation was even higher. The Living Necessities Price Index rose by 3.3% year-on-year, outpacing the overall CPI increase (3.1%). Notably, non-food items surged by 4.2%, adding to the burden. Core inflation indicators—which exclude agricultural products and oil, as well as the OECD-standard index excluding food and energy—both recorded a 2.5% increase, up 0.3 percentage point from the previous month (2.2%). This is seen as a warning sign that external oil shocks are beginning to affect underlying inflation. Both within and outside the market, there is a growing consensus that the May inflation data has all but cemented the likelihood of a base interest rate hike in July.

This content was produced with the assistance of AI translation services.