August Consumer Price Inflation Rises 3.1%... "Base Effect from Last Year’s SK Telecom Discount" (Update)
The consumer price inflation rate for August rose to 3.1%, returning to the 3% range after two months. Although the upward trend in petroleum prices, triggered by the Middle East war, slowed, and prices for agricultural, livestock, and fishery products also declined, a significant base effect was caused by SK Telecom's 50% reduction in mobile service charges last year.
According to the 'Consumer Price Trends for August' released by the Ministry of Data and Statistics on September 2, the consumer price index last month stood at 120.05 (2020=100), up 3.1% year-on-year. Due to the effects of the Middle East war, the consumer price inflation rate was in the 3% range for May (3.1%) and June (3.2%) for two consecutive months, returned to the 2% range in July, and then climbed back up to the 3% level last month.
Petroleum prices increased by 14.2%, with the rate of increase moderating compared to July (15.5%). The contribution of petroleum prices to inflation was 0.54 percentage points, also lower than July (0.60 percentage points). Prices for agricultural, livestock, and fishery products fell by 2.6%.
Nonetheless, the fact that consumer prices rose by more than 3% last month was mainly due to a 26.7% jump in mobile service charges compared to a year earlier. This was attributable to a base effect from a 21.0% decrease in mobile service charges last year. In August last year, after a mass subscriber exodus caused by a hacking crisis, SK Telecom provided a 50% discount on mobile service charges to over 20 million subscribers for one month.
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The Living Necessities Price Index, which reflects perceived inflation based on frequently purchased items, rose by 3.2%. The Fresh Produce Price Index, which indicates "dining table prices," fell by 6.7%. The index for food and energy excluding items, which is the core inflation indicator used by the Organisation for Economic Co-operation and Development (OECD), increased by 3.4%. This marked the largest increase in three years and three months since May 2023 (3.8%).
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