Bank of Korea: "August Prices Expected to Rise Above July... Core Items to Maintain High Growth Rate"

Price Situation Review Meeting Held
July Consumer Price Inflation Rate at 2.8%

As the consumer price inflation rate fell to the 2% range for the first time in three months, the Bank of Korea has projected that the rate of increase may rise again this month. The central bank also expects that core inflation, which excludes food and energy items, will continue to record a high growth rate.

The exterior of the Bank of Korea.

On the morning of August 4, Lee Jiho, Deputy Governor of the Bank of Korea, held a “Price Situation Review Meeting” at the main building of the central bank in Jung-gu, Seoul, in order to assess the recent trends and outlook of price movements.

According to the Ministry of Data and Statistics that day, the consumer price index in July recorded an increase of 2.8%, lower than the previous month’s 3.2% gain. Since the Middle East war, the consumer price inflation rate had steadily climbed—2.2% in March, 2.6% in April, 3.1% in May, and 3.2% in June—but the rate of increase narrowed again this time. The main reasons for this were a sharp drop in petroleum product price growth, which fell due to maximum price cuts, as well as a slowdown in the rise of prices for agricultural, livestock, and fisheries products, affected by the government’s price stabilization measures. The inflation rate for petroleum products dropped significantly from 24.7% in June to 15.5% in July, while the inflation rate for agricultural, livestock, and fisheries products also fell from 3.2% to 0.9% over the same period.

The cost of living inflation rate also decreased substantially, dropping to 2.5% from 3.4% the previous month. Core inflation, on the other hand, recorded a slightly higher rate of 2.6%, up from the previous month’s 2.5%, as prices for travel-related services such as airfare and travel expenses remained elevated, and the rate of increase for durable goods such as IT devices and electric vehicles expanded. Deputy Governor Lee assessed, “Although the cost of living inflation rate, which is heavily influenced by petroleum and agricultural, livestock, and fisheries products, dropped significantly, the core inflation rate slightly increased as the prices of durable goods expanded due to the transmission of cost shocks.”

The inflation rate for consumer prices this month is expected to rise compared to the previous month. This is due to the disappearance of the impact from SK Telecom’s large-scale telecommunications fee discounts that were in effect last year.

Deputy Governor Lee said, “Although the government’s price stabilization measures will serve as a downward factor on consumer prices, we remain cautious, as the high degree of uncertainty related to the Middle East war, the transmission of cost shocks, and increased demand-side pressures are expected to keep core items at persistently high rates. We will continue to closely monitor the price situation.”

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