Seoul: South Korea's consumer prices saw a significant increase of more than 2 percent in January compared to the previous year. This rise is attributed to the depreciation of the Korean won, which led to higher import prices, as revealed by data on Wednesday.
According to Yonhap News Agency, the data from Statistics Korea showed that consumer prices, a crucial measure of inflation, increased by 2.2 percent on-year in January. This marks the first instance in five months where the increase exceeded 2 percent, with the last notable rise being 2.6 percent in July. South Korea's consumer inflation has remained under 3 percent since April and below the central bank's 2 percent target since September, when it recorded a 1.6 percent increase on-year.
The inflation rate experienced fluctuations in the subsequent months, dipping to 1.3 percent in October and then slightly rising to 1.5 percent in November. By December, the rate had reached 1.9 percent. The agency attributed the recent increase in January to rising energy prices and the depreciation of the Korean won, which escalated import costs. Additionally, a base effect from the previous January contributed to the surge.
Petroleum product prices witnessed a notable jump of 7.3 percent from the previous year, marking the largest on-year increase since July, when they rose 8.4 percent. Lee Doo-won, an official from the agency, indicated that the rise in exchange rates during November and December likely impacted petroleum prices, with a time lag expected for other raw materials.
The Korean won has faced pressure due to political instability caused by President Yoon Suk Yeol's brief imposition of martial law on December 3, compounded by U.S. President Donald Trump's tariff threats, which could negatively impact South Korea's export-reliant economy.
According to the agency, agricultural, livestock, and fisheries product prices rose by 1.9 percent on-year last month. Vegetable prices, which had previously experienced double-digit growth, increased by 4.4 percent due to stable shipments of key items. Processed food prices climbed by 2.7 percent, marking the highest increase since January 2024, when they rose by 3.2 percent.
Personal service prices, excluding dining-out services, saw a 3.5 percent increase on-year in January, the highest since December 2023. The rise in service prices was partly attributed to higher insurance premiums, including private health insurance, as well as increased travel demand, which drove up costs for overseas and domestic tours and condominium stays.
Core inflation, which excludes volatile food and energy prices, grew by 1.9 percent on-year, remaining below the 2 percent level for the fourth consecutive month. Prices of daily necessities, encompassing 144 items closely related to everyday life, rose by 2.5 percent, slightly accelerating from a 2.2 percent on-year increase in December.
Amid uncertainties such as global oil price fluctuations and abnormal weather conditions, the finance ministry stated that the government will stay vigilant and strive to stabilize prices. Among the measures planned is an extension of the tariff rate quota on energy and food imports to alleviate household burdens. This system allows a specified volume of imports to enter the country under reduced tariff rates for a set period.