Business & Economy

Inflation in South Korea hits nine-year high in May

Seoul, Jun 2 (EFE).- South Korea recorded a 2.6 percent year-on-year increase in the consumer price index (CPI) in May, the biggest jump in the indicator in nine years that underlines the growing inflationary pressure resulting from the country’s economic recovery.

The CPI for May stood at 2.6 percent year-on-year, up from the 2.3 percent registered in April, Statistics Korea said Wednesday.

Prices in Asia’s fourth largest economy grew by 0.1 percent over April (compared to 0.2 percent last month).

This is the highest rise since April 2012, when the indicator had also posted a 2.6 percent year-on-year increase, mainly due to an increase in prices of agricultural products and fuels.

That is the reason why core inflation, which excludes the prices of fuel and food due to their volatility, was 1.2 percent year-on-year in May.

The statistical agency attributes the increase in fresh food prices partly to the impact of bird flu in South Korea.

The prices of fresh products from the agricultural and fishing sector rose 12.1 percent year-on-year, mainly because of a 45.4 percent increase in egg prices due to the virus that has struck South Korean poultry farms since November.

The agency’s spokesperson, Eo Woon-sun, said at a press conference that the rise in fuel prices is determined by the so-called “base effect” since there was a remarkable fall in prices in the reference month (May 2020) due to the lockdowns imposed in many major economies around the world on account of the pandemic.

The agency expects prices to rise by around 2 percent in June and July and then stabilize, Eo added, local news agency Yonhap reported.

Meanwhile, South Korean Finance Minister Hong Nam-ki, in a bid to allay fears about inflationary pressure, said in a Facebook post that the pressure on prices will be relieved during the second half of the year. EFE


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