Consumer prices rose 3.3%... agricultural product prices soared 15%
The consumer price inflation rate in December was 3.2%, slightly slower than the previous month (3.3%). However, due to bad weather caused by heavy snow, prices of agricultural products rose 15.7% this month, continuing to burden the shopping carts of ordinary people. The annual inflation rate this year was calculated to be 3.6%.
According to the ‘December and Annual Consumer Price Trends’ announced by Statistics Korea on the 29th, consumer prices this month rose 3.2% compared to the same month last year. Since last August (3.4%), it has not broken out of the 3% range for five consecutive months. However, the inflation rate, which rose to 3.8% in October, has been gradually slowing since November (3.3%).
The reason for the slight slowdown in prices compared to last month is the impact of prices of processed foods and industrial products. Processed foods fell from 5.1% in November to 4.2%. Kim Bo-kyung, economic trend statistics reviewer at the National Statistical Office, explained, "The growth rate in processed foods and other industrial products (pet products, bags, etc.) slowed, falling 0.1 percentage points from the previous month." The base effect due to the significant rise in the corresponding item in December last year had an impact. The Ministry of Strategy and Finance evaluated that “prices of agricultural products rose in December, but prices of industrial products such as petroleum, processed foods, and durable goods slowed,” adding, “Prices are generally stabilizing as burdens such as raw material prices are reduced along with the base effect.”
Oil prices are also stable. International oil prices have recently fallen to the mid-$70 range based on Dubai oil on the 27th due to concerns about sluggish global demand and the reduced possibility of the spread of the Middle East crisis. Accordingly, the petroleum index in December fell 5.2% compared to the same month last year. It continues to decline, including -4.9% in September, -1.3% in October, and -5.1% in November. Director Kim said, “Diesel prices have been recording a minus since March (compared to the same month of the previous year),” and “It recorded -14.5% in December following -13.2% in November.” He added, “With international oil prices stabilizing, the government’s “It appears that the fuel tax cut has also had an impact,” he said. The increase in the ‘index excluding food and energy’, a core price index that shows trending prices excluding highly volatile food and energy, was 2.8%, down 0.1 percentage points from November (2.9%). The cost of living index was 3.7%.
Prices of agricultural products rose significantly this month as well. Following 13.6% in November, prices of agricultural, livestock and fishery products rose 15.7% this month, leading the price of agricultural, livestock and fisheries products (7.7% increase). Apples jumped 54.5% and tomatoes jumped 45.8%. The impact of decreased production due to bad weather was significant. The fresh food index also recorded a high rise of 14.5% this month. This is the largest increase in 16 months since August 2021 (14.5%). As production decreased due to worsening weather conditions caused by heavy rain and snow, the cultivation area of apples and other crops was affected by a decrease.
The annual consumer price index is 3.6%... Agricultural products have risen in double digits since October
This year's annual consumer price index rose 3.6% compared to last year. Although it has slowed down from last year (5.1%) when prices soared, it is still higher compared to 2021 (2.5%). This year, electricity, gas, and water prices jumped 20.0% due to price increases for electricity and city gas, driving overall prices. It rose by the largest margin in 13 years since 2010, when related items were compiled.
In particular, agricultural, livestock, and marine products rose by 3.1%, mainly agricultural products (6.0%) and marine products (5.4%). In the second half of this year, agricultural product prices continued to remain high due to the effects of heat waves in the summer and abnormally low temperatures in the fall. It rose to double digits for three consecutive months in October, November (14.7%), and December (15.7%). In particular, the increase was large for apples (24.2%), tangerines (19.1%), strawberries (11.1%), and green onions (18.1%).
Prices of agricultural and marine products are unlikely to stabilize for the time being, and the burden on the shopping carts of ordinary people is expected to continue. Director Kim predicted, “There are cases where the government expands imports of fruit and other products, but it is unlikely that this level will drop significantly within a month or two.” An official from the Ministry of Strategy and Finance said, “Fruit prices are continuing to trend higher due to changes in weather conditions, etc.,” adding, “The government will make efforts to ease the price burden by additionally importing small fruits.”