Consumer Prices Rise at Fastest Clip in 9 Years

  • By Kim Jung-hoon

    June 03, 2021 12:42

    Consumer prices increased 2.6 percent on-year in May, according to Statistics Korea on Wednesday, fueling fears of inflation. It was the biggest increase since April 2012 and faster than the government's projection of two percent.

    Fresh foods and petrochemicals led the increase. Prices of agricultural and livestock products increased 12.1 percent as supplies were affected by poor crops and bird flu. Petrochemicals prices surged 23.3 percent, the biggest rate of growth since August 2008.

    The rising prices reflected the economic recovery. Exports surged 45.6 percent on-year in May, the highest rate in 32 years, and retail sales rose 2.3 percent on-month.

    International oil prices, which surged to a two-year high of US$70 a barrel, are another sign that the global economy is returning to normal.

    A woman shops for groceries in a superstore in Seoul on Wednesday.

    The Bank of Korea said it could not rule out "higher-than-expected inflation pressures." Inflation could accelerate an interest rate hike, which would increase the burden on households that have taken out W1.765 quadrillion worth of loans (US$1=W1,114).

    Experts warn that the risk of rising inflation needs to be monitored continually. Kim So-young at Seoul National University said, "Even if supplies of agricultural and livestock products stabilize, inflation could increase in the second half due to rising consumption fueled by pent-up demand."

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