Economy News

S. Korea's CPI stays below 1 pct for 2 months

South Korea's consumer price index (CPI) hovered below 1 percent for two straight months on lower oil price and cheaper public services, statistical office data showed Wednesday.

The CPI stood at 105.50 in November, up 0.6 percent from a year earlier, according to Statistics Korea.

The headline inflation accelerated from 0.3 percent in July to 0.7 percent in August and 1.0 percent in September each, before slowing down to 0.1 percent in October and 0.6 percent in November respectively.

Price for agricultural, livestock and fishery products soared 11.1 percent in November from a year earlier, but it was slightly down from a 13.3-percent increase in October.

Agricultural product price jumped 13.2 percent, with vegetable price advancing 7.0 percent. Price for onion, apple and red pepper powder skyrocketed 75.2 percent, 36.4 percent and 30.8 percent each.

Livestock product price went up 9.9 percent last month, with price for pork and beef surging 18.4 percent and 10.5 percent respectively.

Price for industrial products slipped 0.9 percent in November from a year earlier amid cheaper crude oil. Oil product price tumbled 14.8 percent, but processed food price gained 1.6 percent.

Price for electricity, tap water and natural gas declined 4.1 percent last month.

Public services price retreated 2.0 percent due to the policy effect, including an expanded subsidy for kindergarten tuition and a financial support for school lunch fee.

Private services price went up 1.3 percent in November from a year ago. The expense of dining out rose 0.9 percent as the government tightened its five-tier social-distancing rules to the third-highest Level 2 from Nov. 24.

The growth rate of the dining-out cost was relatively low as restaurants are allowed to serve food until 9 p.m. local time under the Level 2 distancing. Only delivery and takeout are available after 9 p.m. local time.

In coffee shops and cafes, indoor dining is not allowed, with only delivery and takeaway being permitted.

House rent, including Jeonse and monthly rent, was up 0.6 percent in November, marking the highest increase since June 2018.

Jeonse is the country's unique contract between two households where a landlord grants a residence right for two years to a tenant, who in turn lends a certain amount of money, or deposit, to the homeowner.

Core consumer price index, which excludes volatile agricultural and oil products, rose 1.0 percent in November from a year ago. The OECD-method core price, which excludes food and energy cost, added 0.6 percent last month.

The demand-side inflationary pressure remained low amid an economic fallout from the COVID-19 pandemic.

It left more room for the Bank of Korea (BOK) to keep the benchmark interest rate unchanged at the current record low of 0.50 percent for an extended period of time.

The BOK cut the key rate by 25 basis points to 0.50 percent in May, after slashing it by 50 basis points in March in a bid to tackle the economic downturn from the pandemic. 

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