August Consumer Prices Up 3.1%... Core Inflation Hits 3-Year, 3-Month High (Comprehensive)

Trends in Consumer Prices for August by the Ministry of Data and Statistics
Base Effect from Mobile Phone Charges Drives Inflation

The consumer price inflation rate in August returned to the 3% range after two months, reaching 3.1%. This occurred despite a slowdown in oil price increases caused by the aftermath of the Middle East conflict and falling prices for agricultural, livestock, and fishery products, due to a significant base effect from last year's reduction in mobile phone charges. Notably, core inflation, which excludes highly volatile food and energy prices, expanded to 3.4%, marking the highest level in three years and three months.

According to the "Consumer Price Trends for August 2026" announced by the Ministry of Data and Statistics on September 2, the Consumer Price Index (CPI) last month was 120.05, up 3.1% compared to the same month a year earlier. The consumer inflation rate surged from 2.6% in April to 3.1% in May and 3.2% in June due to the impact of the Middle East conflict, then slowed to 2.8% in July, but returned to the 3% range in just a month.

Customers are shopping at Hanaro Mart Yangjae branch in Seocho-gu, Seoul, on the 10th, as prices of some agricultural products such as spinach and cucumbers have surged amid the ongoing severe heatwave. According to the Korea Agro-Fisheries & Food Trade Corporation, the retail price of spinach is 1,978 won per 100g, up 152.3% from 784 won a month ago, while the retail price of cucumbers has risen 54.8% from 5,369 won to 8,313 won for 10 pieces. August 10, 2026. Photo by Kang Jin-hyung

Base effect from mobile phone charges drives inflation higher

The most prominent factor behind this rise in inflation was the base effect from telecommunication charges. Communication prices soared by 16.6% compared to the same month last year, the highest since statistics began in 1985. The contribution of communication prices to overall inflation was 0.63 percentage points. Mobile phone charges, in particular, jumped by 26.7%, driving up telecom prices. This was because, in August last year, SK Telecom offered a 50% discount to all subscribers on communication fees as compensation for a personal information leak, temporarily lowering charges. As the price decline from August last year disappeared from the calculation base in this August, a much higher year-on-year growth rate was reflected. Lee Doowon, Economic Trends Director at the Ministry of Data and Statistics, said, "The base effect from the reduction in mobile phone charges accounted for about 0.58 percentage points, meaning that if this is excluded, this month's consumer inflation would be around 2.5%."

The impact of communication charges was even more pronounced in core inflation. Core inflation, which excludes food and energy, rose 3.4% year-on-year— the highest growth since May 2023 (3.8%) in three years and three months. The agricultural and petroleum products exclusion index, which is Korea's core inflation indicator, also rose 3.1% year-on-year. This is 0.6 percentage points higher than July's 2.5%, and the highest since December 2023 (3.1%), two years and eight months ago.

Core inflation is an index that illustrates the "underlying strength" of prices by excluding items whose prices swing sharply due to seasonal factors or external shocks such as international oil price changes. The components of core inflation, such as dining out, personal services, rent, and processed food, exhibit "downward rigidity," meaning that once these prices rise, they rarely fall. The Ministry of Data and Statistics explained the surge in core inflation by saying, "The weight of the base effect from last year's reduction in mobile phone charges was even greater in core inflation than in the overall CPI, amplifying the increase."

However, just because core inflation was heavily affected by the base effect, it does not mean that the burden of perceived prices has decreased for households. In fact, the "living cost index," which consists of items with high purchase frequency and a large share of household spending, rose by 3.2% year-on-year. Living costs excluding food rose an even steeper 4.8%, far outpacing overall inflation. Upward pressure also persisted in food prices: processed food prices rose 0.7% month-on-month, with significant increases in daily staples such as bread (3.0%), snack crackers (3.2%), noodles (12.1%), and cereal (14.9%) in just one month. Year-on-year, processed food prices climbed 1.5%. The continued rise in the prices of processed food, dining out, and other daily essentials means that households are still feeling a high inflationary burden.

Agricultural, livestock, and fishery products down 2.6%... Vegetables up 12.4% in one month

The prices of agricultural, livestock, and fishery products fell 2.6% year-on-year. The primary factor was a 6.7% decrease in agricultural products. Meanwhile, livestock prices rose 1.5%, and fishery products were up 3.8%. The decline in fruit prices accelerated due to increased shipments and discount events: compared to a year earlier, apples fell 8.9%, napa cabbage dropped 26.2%, and tomatoes declined 24.8% respectively.

However, vegetable prices jumped 12.4% from the previous month due to summer weather conditions and reduced shipments. Napa cabbage rose 37.0%, spinach 68.2%, scallions 64.7%, young radish 52.4%, cucumber 40.4%, and lettuce 28.4%, respectively. The fresh food index was down 6.7% year-on-year, with fresh vegetables down 9.8% and fresh fruit down 10.0%. However, compared to the previous month, the fresh food index increased by 3.0%, and fresh vegetables rose by 12.5%. Lee, the Economic Trends Director, analyzed, "These changes reflect decreased shipments due to higher temperatures during the summer, pest damage, increased demand during the vacation season, and rising management costs."

Transportation costs were up 7.2% year-on-year. However, compared to July's 7.7%, the increase has moderated. While international airfare, reflecting higher global oil prices, rose sharply, the slower pace of oil price increases helped temper the rise in transportation costs. Personal services rose by 3.5%. Insurance service fees increased by 13.4%, overseas group travel expenses by 14.9%, apartment maintenance fees by 3.3%, and automobile repair costs by 6.3%, respectively. Dining out prices rose 2.7%, while other services excluding dining out climbed 4.0%.

The government stated, "We will thoroughly implement Chuseok holiday price stabilization measures to keep inflation in check, including operating the petroleum price ceiling system for oil price stability, supporting discounts on agricultural, livestock, and fishery products, and expanding the supply of holiday essentials."

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