Perceived inflation higher than official rate due to rise in meat, utility prices

The sharp rise in meat, dairy and public utility prices pushed up inflation perceived by ordinary people last year to more than the marginal gains tallied by the government, statistics agency said Monday.

Data by Statistics Korea showed that while inflation rose 1.3 percent last year compared to 2013, prices of certain key commodities that directly impact people’s everyday lives rose at a faster clip, offsetting some of the advantages of lower costs for consumers.

Last year’s inflation gain is unchanged from the year before and the lowest tallied since 1999, according to the agency.

Prices of pork, however, surged 15.9 percent on-year, the sharpest gain since the 28.1 percent increase tallied for 2011.

The statistical office’s figures showed prices for imported and locally produced beef rose an average of 10.7 percent and 6.2 percent, respectively, in the one-year period.

The increase reflects supply shortages caused by less livestock raised in the country.

In addition to meat, prices of eggs and milk rose 8.2 percent and 7.4 percent each last year, while powdered milk costs jumped 7.1 percent. Prices of chocolate and other types of biscuit snacks rose by double digits throughout the year.

Among manufactured goods, prices of toothpaste, notebooks and handbags rose by over 10 percent on-year.

The data also showed sewage charges surging 11.6 percent on-year in 2014 from 7 percent in the previous year, with city gas prices gaining 6.4 percent.

Part of the hike comes from local administrations that, after holding off raising utility costs in the past, marked up charges last year.

“Last year’s low inflation stems from vegetable prices nosediving 16.8 percent last year,” the statistical office said.

It added that the reason some people question the accuracy of official consumer price figures is because of the sharp increase in the cost of certain items and public services. Moreover, the marginal rise in household income played a part in affecting public perceptions of consumer prices, it said.

Government records say average annual household income gains have remained at around 1 percent in the past few years.

Lee Joon-hyup, a research fellow at Hyundai Research Institute, said that while inflation numbers did not actually rise overall, due to a sluggish rise in household income and a spike in certain commodities, a discrepancy emerged between state statistics and what people felt personally.

A survey by the Federation of Korean Trade Unions of its members showed people claiming consumer prices rose 4.1 percent this year from the year before.

Living expenses for a four-person family with two kids in primary school stood at a little over 5.56 million won ($5,133) per month, a gain of 3.74 percent on-year, according to the survey.

Expenses rose if children were in middle or high school, and topped 6.83 million if they were in university.

By comparison, the average wage of local laborers stood at 3.12 million won per month in October last year, according to FKTU.

“Of all spending, lodgings, medical services and education accounted for 30 percent of the total outlays and played a part in burdening households,” the FKTU said. (Yonhap)