SEJONG, Dec. 1 (Korea Bizwire) – South Korea’s consumer inflation inched up to a one-year high in November as a drop in oil prices slowed, a government report showed Tuesday, a positive development for Asia’s fourth-largest economy struggling to shake off deflation concerns.
The country’s consumer price index gained 1 percent last month from a year earlier, up from a 0.9 percent on-year gain in October and the highest increase since November 2014, according to the report by Statistics Korea.
“The main reason for the rise in numbers can be attributed to a more modest drop in international crude prices,” said Woo Young-jae, head of the statistical agency’s prices statistics division.
Oil prices were down 17.5 percent on-year, compared with the 18.6 percent drop in October.
The official said the November gain was also propped up by higher prices of some farm produce like beef and steady gains in rent, public utilities and transportation costs.
Prices of industrial goods stood unchanged from the year before, an improvement from the 0.3 percent fall posted for the previous month.
Farm produce prices, which include meat and fish, rose a solid 1.7 percent on-year last month. Data showed that prices of beef shot up 12.2 percent.
Core inflation, which excludes volatile oil and food prices, increased 2.4 percent from a year earlier. November marked the 11th straight month that core inflation grew more than 2 percent on-year, the statistical office said.
In the service sector, prices gained 2.2 percent in the cited month from the year before and were unchanged vis-a-vis October. The increase was attributed to the 2.8 percent jump in rent prices, as well as gains in both public and private service costs.
The statistical service said last month’s “living necessities” price index, which measures the cost of key products that people consume on a daily basis, edged up 0.1 percent on-year in the one-month period.
The slight gain marks the second time this year that the index has moved back into positive territory. Growth numbers that had moved up since the government started releasing the index in 1995 have been losing steam since August of last year and have been in negative territory since January.
The finance ministry said supply-side factors, such as weak crude oil prices, are continuing to curb the rise in consumer inflation. It pointed out that weak oil prices pushed down inflation by 0.85 percentage point last month.
“This is not as bad as minus 0.92 percentage point posted for the previous month, but oil prices remain a drag on consumer price gains,” it said.
On the plus side, the ministry said, the country’s expected inflation rate released by the Bank of Korea stood at 2.5 percent in November. This rate is a barometer of future inflation as predicted by economic factors.
The ministry noted that international crude prices that stood above US$100 per barrel until the third quarter of last year started to fall in the last three months. This, it claimed, will ease the high base effect that has played a key part in depressing inflation numbers this year.
The ministry, meanwhile, said it plans to keep close tabs on all factors that can influence inflation and prevent any sudden spikes that can adversely impact the everyday lives of ordinary people.