Vice Minister Lee Hyungil: "Inflation Easing... All-Out Efforts to Minimize Upward Pressure"

Consumer prices fall month-on-month in July, first decline in eight months

Base effect from telecom discounts, Middle East risks, and abnormal weather

Government focuses on minimizing upward price pressures

As a result of the government’s comprehensive price stabilization measures for everyday essential goods and the implementation of maximum oil price reductions, the consumer price inflation rate in July eased to the 2% range for the first time in three months. Compared to the previous month, prices shifted into a downward trend for the first time in eight months, signaling that the accumulated inflationary pressures are moving into a period of moderation.

Lee Hyungil, First Vice Minister of the Ministry of Finance and Economy. The Asia Business Daily DB.

On August 4, the government held a 'Vice Ministerial Meeting on Prices' presided over by Lee Hyungil, First Vice Minister of the Ministry of Finance and Economy. According to the analysis of July's consumer price trends, the year-on-year inflation rate stood at 2.8%. This figure is 0.4 percentage points lower than in June (3.2%), marking a return to the 2% range after three months. On a month-on-month basis, prices decreased by 0.2%, achieving a negative monthly change for the first time in eight months.

The government assessed that its active policy efforts, such as the largest-ever discounts for agricultural, livestock, and fisheries products and the maximum price control for petroleum products announced on June 26, have played a leading role in stabilizing prices. In particular, the seventh round of oil price reduction measures, which took effect on June 27 (a cut of 150 won per liter), is estimated to have lowered the July inflation rate by about 0.3 percentage points. This achievement is especially notable when compared to major economies such as the eurozone, where, due to rising energy costs, the July inflation rate actually increased (from 2.8% in June to 2.9% in July), highlighting the effectiveness of the Korean government’s inflation management.

To solidify this trend of price stabilization and completely alleviate the public’s cost burden, the government plans to maintain its all-out response strategy throughout August. It is anticipated that the base effect from the temporary mobile phone bill discounts implemented in August last year will be equivalent to 0.8 percentage points. Given the ongoing uncertainties in the Middle East and abnormal weather conditions such as heatwaves, the government will continue to focus its efforts on minimizing any remaining upward pressure on prices.

To this end, the government will continue nationwide discount events for all agricultural, livestock, and fisheries products, which started in July, into August. For seafood, in addition to mackerel, if the prices of hairtail and squid rise, the government will respond preemptively by purchasing and releasing these products at discounted prices. In the oil sector, the government will further select "good gas stations" (on August 4) and secure crude oil reserves to ensure a stable supply.

Vice Minister Lee stated, "Despite the slowdown in inflation, accumulated price increases have maintained prices at high levels, and the burden on people's livelihoods persists. Therefore, we must not let our guard down and continue to do our utmost." He added, "In order to further relieve the public’s sense of burden, we will thoroughly prepare for upward risks in August and ensure there are no setbacks in our preparations for the 'Chuseok Price Stabilization Measures', which will be announced in September."

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