Vice Minister Lee Hyungil: "Price Increase Trend Eases... All-Out Efforts to Minimize Upward Pressure" (Comprehensive)

Consumer Prices Decline Month-on-Month in July for the First Time in Eight Months
Focusing on Minimizing Upward Pressure from Mobile Bill Base Effect, Middle East Risks, and Extreme Weather

The government’s comprehensive measures to stabilize the cost of living, along with the reduction of the maximum price of petroleum products, have borne fruit: the consumer price inflation rate in July moderated to the 2% range for the first time in three months. On a month-on-month basis, consumer prices declined for the first time in eight months, signaling that the accumulated inflationary pressure is now entering a clear phase of stabilization.

Lee Hyungil, First Vice Minister of the Ministry of Finance and Economy, is presiding over the '72nd Price-Related Vice Ministerial Meeting' held on the 4th at the Government Complex Seoul in Jongno-gu, Seoul. Ministry of Finance and Economy. Photo by Yonhap News Agency

On August 4, the government held a 'Vice Ministerial Meeting on Prices' presided over by Lee Hyungil, First Vice Minister of the Ministry of Strategy and Finance. According to the analysis of July consumer price trends, the inflation rate compared to the same month last year stood at 2.8%. This is 0.4 percentage points lower than June (3.2%), returning to the 2% range for the first time in three months. On a monthly basis, prices declined by 0.2%, marking a switch to negative growth for the first time in eight months.

The government assessed that its proactive policy measures—including the largest-ever support for discounts on agricultural, livestock, and fisheries products, and the maximum price policy for petroleum-based products announced on June 26—have driven the stabilization of prices. In particular, the 7th round of maximum price reductions (a cut of 150 won per liter), implemented from June 27, is estimated to have lowered the July inflation rate by approximately 0.3 percentage points. Compared to major countries such as the Eurozone, where July inflation actually increased (from 2.8% in June to 2.9% in July) due to rising energy prices, the South Korean government's record in price management stands out.

The government will maintain an all-out response strategy in August in order to solidify this stabilization trend and completely ease the burden on people’s livelihoods. The base effect from last August’s temporary mobile phone bill discount is expected to reach 0.6 percentage points, and there are still remaining upward pressures from ongoing uncertainty in the Middle East and extreme weather conditions such as heatwaves. The government will focus its efforts on minimizing these residual upward pressures.

To this end, the comprehensive discount campaign for all agricultural, livestock, and fisheries products, which began in July, will continue through August. For fisheries, if prices of hairtail and squid, in addition to mackerel, rise, the government will step in to make direct purchases and release them to the market at discounted prices, as a preemptive market stabilization measure. For petroleum products, the plan is to ensure stable supply by designating additional 'good gas stations' on August 4 and securing sufficient oil stockpiles.

Vice Minister Lee stated, "Although the upward trend in prices is easing, inflation has accumulated over time and remains at a high level, and the burden on the public is still significant. Therefore, we must remain vigilant and do our utmost." He added, "In order to further alleviate the people’s cost of living, we will thoroughly prepare for upward risks in August and ensure there are no setbacks in formulating the ‘Chuseok Livelihood Stabilization Measures’ to be announced in September."

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