S. Korea's inflation picks up in July on high fruit, oil prices

South Korea's inflation picked up pace in July on high prices of fruits and petroleum products, though it stayed below 3 percent for the fourth consecutive month, data showed Friday.

Consumer prices, a key gauge of inflation, rose 2.6 percent on-year last month, compared with a 2.4 percent increase a month earlier, according to the data from Statistics Korea.

It was the first time in six months that the price growth accelerated.

In January, inflation slowed to 2.8 percent, dropping below 3 percent for the first time since July 2023 but edged up to 3.1 percent in February and stayed at the same level the following month before cooling to 2.9 percent in April.

The figure then fell to 2.5 percent in May and further to 2.4 percent in June, which was the lowest level since July 2023.

The government has said that the country is projected to reach the target rate of 2 percent by around the end of 2024, though prices are forecast to ease at a slower pace than earlier expected.

The finance ministry expects this year's prices to rise 2.6 percent.

Inflation in July was led by high prices of farm produce, particularly fruits.

Prices of agricultural, livestock and fisheries products went up 5.5 percent on-year. Agricultural products, in particular, spiked 9 percent.

Of major items, prices of apples soared 39.6 percent, and prices of pears surged by a record level of 154.6 percent.

Agency officials said the country is experiencing a supply shortage of fruits due to poor harvests last year amid unfavorable weather conditions, and such high prices are expected to continue for some time.

Prices of petroleum products climbed 8.4 percent on-year in July, the highest growth since October 2022.

It was attributable to instability in global oil prices over the Middle East crisis and the government's adjustment of the tax cut on fuel for automobiles.

Dubai crude, South Korea's benchmark, came to US$83.83 per barrel on average last month, rising from June's $82.56, according to government data.

South Korea extended the fuel tax cut scheme by two months through end-August but adjusted the reduction rate for gasoline to 20 percent from 25 percent and that for diesel and LPG butane to 30 percent from the previous 37 percent discount.

Service prices gained 2.3 percent on-year in July.

Core inflation, which excludes volatile food and energy prices, added 2.2 percent.

Prices of daily necessities -- 144 items closely related to people's everyday lives, such as food, clothing and housing -- climbed 2 percent last month, slowing from 2.8 percent growth in June, the data showed.

"Despite the uptick over heavy downpours and unstable global oil prices, consumer prices have generally stabilized," First Vice Finance Minister Kim Beom-seok said during an economy-related vice ministers' meeting.

"Inflation is forecast to cool again, starting in August, though the government will stay vigilant and respond appropriately in accordance with contingency plans." (Yonhap)