Korea’s consumer inflation slows in June

Korea’s consumer prices grew at a slower pace in June amid the government’s push to tame inflationary pressure, a report showed Monday.

According to the report by Statistics Korea, the country’s consumer price index rose 2.2 percent in June from a year earlier, slowing from a 2.5 percent gain in May.

June’s reading marks the fourth month in a row that inflation stood in the 2 percent range and the lowest gain in 32 months after prices rose 2.0 percent on-year in October 2009.

The so-called core inflation, which excludes volatile oil and food costs, grew 1.5 percent from a year earlier, which represents a deceleration from a 1.6 percent increase for the previous month.

“Manufactured goods, fresh farm produce and public utilities raised prices, but such gains were offset by weak growth in the service sector like payments covering childcare, school lunches and telecommunication-related fees,” said Ahn Hyung-jun, the head of the statistical office’s prices statistical division.

Goods prices that covered farm, manufactured products and utilities rose 3.6 percent from the year before, but service sector charges went up just 1.2 percent.

Public and private service prices, respectively, rose a modest 0.8 percent and 0.5 percent on-year in June.

Telecommunication fees contracted 3.4 percent on-year with preschool childcare and kindergarten outlays dropping 34.0 percent and 11.1 percent each. The drop occurred after the government moved to expand monetary support for small children in answer to public demand.

Education-related expenses from elementary school through high school, however, rose 4-5 percent from the previous year.

The office said prices for food, farm and non-alcoholic beverages shot up 5.2 percent, with clothing and transportation prices going up 5.6 percent and 4.2 percent compared to June 2011.

Rent also gained 4.3 percent on-year and 0.1 percent from May.

Despite the on-year gains, food, farm and non-alcoholic beverages contracted 0.4 percent vis-a-vis the month before, with numbers for transportation dropping 1.1 percent, it said.

Lower transportation costs were due to a drop in the prices of gasoline, diesel fuel and liquefied petroleum gas used for cars, which all fell by over 2 percent last month from May, the statistical office said.

Related to the latest report, the finance ministry said the country’s consumer prices have stabilized noticeably by growing just 2.7 percent on-year in the first half, down from the earlier prediction of 3.3 percent.

For the future, the ministry forecast that persistent eurozone fiscal woes and sluggish global economic growth will generally help prevent price hikes.

It, however, said that the long spring drought may affect prices of local farm produce, while some international commodities prices are showing signs of instability that may require the government to take action. 

(Yonhap News)