South Korea’s inflation dips to 2% range after 3 months in April

South Korea’s inflation rate eased to 2.9 per cent in April compared to the same month a year earlier, according to data released by Statistics Korea on Thursday. This marks the first time in three months that the country’s consumer price index, a key gauge of inflation, has fallen below the 3 per cent mark.

The April inflation reading of 2.9 per cent reflects a 0.2 percentage point decrease from the 3.1 per cent recorded in March. Before April, inflation had briefly dipped below 3 per cent in January to 2.8 per cent, before spiking again in February to 3.1 per cent due to high prices of fruits, agricultural produce, and energy.

Once again, farm produce, particularly fruits, emerged as the primary driver of inflationary pressure in April. Prices of agricultural, livestock, and fishery products surged by 10.6 percent year-on-year last month, significantly contributing to the overall inflation rate.

South Korea’s inflation in April was significantly impacted by soaring prices of agricultural products, particularly fruits. Agricultural product prices spiked a staggering 20.3 per cent year-on-year, accounting for a 0.76 percentage point increase in the overall 2.9 per cent inflation rate.

Among major items, apple prices surged by an alarming 80.8 per cent, while pear prices skyrocketed by a record 102.9 per cent compared to the same period last year. Prices of industrial products also rose by 2.2 per cent, with petroleum products increasing by 1.3 per cent due to global oil price instability caused by the ongoing Middle East crisis.

The average price of Dubai crude, South Korea’s benchmark oil, climbed steadily from $78.85 per barrel in January to $80.88 in February, $84.18 in March, and reached $89.17 per barrel in April, according to government data.

Additionally, service prices contributed to the inflationary pressure, rising by 2.2 per cent year-on-year in April. Core inflation, which excludes volatile food and energy prices, stood at 2.3 per cent compared to the same month in 2023.

The high inflation rate also impacted the prices of daily necessities in South Korea. According to the data, the cost of 144 essential items closely tied to everyday life, including food, clothing, and housing, climbed by 3.5 per cent in April compared to last year.

Despite the overall inflation rate dipping below 3 per cent for the first time in three months, the government has stated that consumer prices are expected to ease slower than anticipated before reaching the target rate of 2 per cent around the end of 2024.