Inflation in South Korea Predicted to Accelerate on High Oil Prices


SEOUL, Aug. 27 (Yonhap) — South Korean consumer prices are anticipated to accelerate in the coming months following a period of decline, mainly due to the rising cost of global oil, officials said Sunday.

Consumer prices, a key measure of inflation, are projected to be over 3 percent higher than a year earlier in August and September, compared to a 2.3 percent increase in July, according to finance ministry officials.

Inflation has been on a downward trend this year, decreasing from 5.2 percent in January to below 3 percent in June for the first time since September 2021.

The July figure was the lowest growth in 25 months.

The expectation of an upturn is a result of the recent surge in global oil prices and South Korea’s reliance on importing for its energy needs.

The price of Dubai crude, South Korea’s benchmark, averaged $86.41 per barrel from Aug. 1-25, up from $80.45 per barrel in July and $74.99 in June.

Prices of agricultural products, food and other necessities could also show a significant increase in the coming months, as heavy downpours damaged crops and demand for those items will increase for the Chuseok holiday next month.

However, inflation is expected to decrease again in October due to high base effects and reduced demand after the holiday, the officials said.

“The recent sharp rise in global oil prices appears to push up inflation to over 3 percent in August and September, though we are expected to see the figure fall back to the 2 percent range on average afterward,” Finance Minister Choo Kyung-ho told a parliamentary session last week.

The prices of gasoline and diesel are displayed at a gas station in Seoul on Aug. 20, 2023. Gasoline prices jumped 32.7 won from a week earlier to an average of 1,727.7 won per liter in the third week of August, and diesel prices surged 62.3 won to 1,588.3 won, according to Opinet, operated by the Korea National Oil Corp. (Yonhap)

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