July Consumer Prices Rise 2.8%... Return to 2% Range After Three Months as Petroleum Surge Eases (Update)

Petroleum Products' Contribution to Inflation Down 0.33 Percentage Points from Previous Month
Stable Prices of Agricultural, Livestock, and Fisheries Products Ease Inflationary Pressure

In July, consumer prices rose by 2.8% year-on-year, narrowing the increase by 0.4 percentage points compared to June (3.2%). As a result, the rate of inflation has returned to the 2% range for the first time in three months.

A price notification board is placed at the Meeting Plaza gas station in Seocho-gu, Seoul. Photo by Yonhap News.

According to the "Consumer Price Trends for July 2026" released by the Ministry of Data and Statistics on August 4, last month's consumer price index stood at 119.77 (2020=100), up 2.8% from the same month last year. This year, consumer prices increased by 2.0% in January, 2.0% in February, 2.2% in March, 2.6% in April, 3.1% in May, and 3.2% in June, with the pace of growth picking up, but the upward trend slowed in July.

The key variables affecting price fluctuations were petroleum products and electricity, gas, and water services. Although the prices of petroleum products such as diesel (up 21.5%) and gasoline (up 12.6%) increased by 15.5% year-on-year, they fell by 5.5% compared to the previous month as the surge seen after the Middle East war somewhat subsided. The contribution of petroleum products to price increases also declined from 0.93 percentage points in June to 0.60 percentage points in July, a drop of 0.33 percentage points.

Prices of agricultural, livestock, and fishery products rose by 0.9% year-on-year. Prices increased for domestic beef (up 5.7%), rice (up 7.9%), imported beef (up 8.7%), and eggs (up 7.5%), but fell significantly for cabbage (down 18.4%), watermelon (down 11.1%), and spinach (down 21.3%). Limiting the scope to agricultural products, prices dropped by 2.2% compared to a year earlier. The contribution of agricultural, livestock, and fishery products to overall price increases declined by 0.17 percentage points month-on-month (from 0.24 percentage points to 0.07 percentage points), alleviating upward pressure on prices. Processed food products showed a mild increase, up 1.0% year-on-year.

Service prices rose by 2.6% year-on-year. Rent increased by 1.1%, with both jeonse (long-term deposit-based lease) up 1.1% and monthly rent up 1.2%. Public services rose only 1.4%, affected by cuts in kindergarten fees (down 41.3%) and child care facility charges (down 18.3%), while personal services climbed by 3.5% due to rises in insurance service fees (up 13.4%) and overseas group travel expenses (up 20.0%). The living necessities price index, which reflects perceived inflation, increased by 2.5% year-on-year, with food (up 1.6%) and non-food items (up 3.2%) both rising.

The fresh food index, which is affected by weather conditions, fell by 2.3% year-on-year. Although the price of fresh fish and shellfish rose by 4.4%, both fresh vegetables (down 4.3%) and fresh fruits (down 4.7%) declined across the board. Compared to the previous month, the fresh food index also dropped 0.8%, indicating a stable supply of vegetables and fruit.

The "index excluding food and energy," the core inflation indicator used by the OECD that shows the long-term trend in prices, rose by 2.6% year-on-year. The domestic core inflation index, which excludes agricultural products and petroleum, increased by 2.5% compared to the same month last year.

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