SEOUL: South Korea’s consumer price inflation missed the Bank of Korea (BOK)’s inflation target for six months in a row, with BOK head set to explain why the inflation stayed so low for the first time, a government report showed on Friday. Consumer prices rose 0.8 percent in June from a year earlier, keeping a zero-percent increase for two straight months, according to Statistics Korea.
The consumer price inflation accelerated from 0.8 percent in January to 1.3 percent in February, before slowing to 1.0 percent in March and April each. It fell further to 0.8 percent in May and stayed at the level in June, hovering below the BOK’s inflation target of 2.0 percent for six straight months.
Starting from this year, the BOK is required to explain the reason for the headline inflation missing the range of 1.5 percent to 2.5 percent for over six months. BOK Governor Lee Ju-yeol is scheduled to hold a press conference on July 14 for the explanation.
The monthly headline inflation averaged 0.9 percent in the first half, lower than the BOK’s inflation forecast of 1.0 percent due to lower crude oil prices. Dubai crude, South Korea’s benchmark, tumbled below 30 U.S. dollars per barrel earlier this month and recently advanced to the upper end of 40 dollars. The June headline inflation, which hovered below 1 percent, came as low crude oil prices pulled down prices for oil products, which tumbled 9.6 percent in June from a year ago.
The oil products dragged down the overall inflation by 0.41 percentage points last month, while services prices raised the headline inflation by 1.24 percentage points. Services prices gained 2.2 percent in June from a year earlier, with sewage fee and intra-city bus fare jumping 18.4 percent and 9.6 percent respectively.
Farm goods prices shrank 0.7 percent in June from a year ago, marking the fastest fall since March last year. Garlic prices soared 57.1 percent, with prices for crab, beef, cucumber and banana advancing 38.7 percent, 18.9 percent, 15.1 percent and 9.9 percent each.
Prices for green onion, tomato and oriental melon plunged 21.8 percent, 19.9 percent and 18.8 percent each, with those for egg and rice declining 13.3 percent and 9.7 percent respectively. Core consumer prices, which exclude volatile agricultural and oil products, gained 1.7 percent on a yearly basis, and the OECD-method core prices excluding energy and food advanced 2.0 percent last month.
The so-called livelihood prices, which gauge the prices of daily necessities, inched up 0.1 percent in June from a year earlier, but the fresh food price index, which measures fruits and vegetables, declined 1.7 percent in June, the first decline in 14 months. Industrial goods prices shed 0.4 percent, while prices for electricity, tap water and gas slipped 6.5 percent due to lower prices of city gas and regional heating costs that tumbled 15.7 percent and 16.9 percent respectively.
Prices for Jeonse, South Korea’s unique home lease contract, advanced 3.7 percent in June from a year ago. Jeonse is a contract between two households where a landlord grants the residence right for two years to a tenant, who in turn lends a certain amount of money, or deposit, to the landlord.
