Published : Feb. 3, 2015 - 19:09
South Korea’s consumer prices grew at less than 1 percent for the second month in a row in January, a government report showed Tuesday, deepening worries of deflation.
The country’s consumer price index edged up 0.8 percent last month from a year earlier, unchanged from a yearly gain reached in December, according to the report by Statistics Korea.
Last month’s numbers, like those reached in December, are the lowest since October 2013 when consumer prices rose 0.9 percent on-year.
The country’s annual inflation rate stood at 1.3 percent for 2014, unchanged from the year before.
The price index edged up 0.5 percent on-month in January after remaining flat in December. Before the last month of 2014, inflation figures contracted for three straight months from September through November.
The core inflation, which excludes volatile oil and food prices, rose 2.4 percent on-year and was up 0.9 percent from the previous month. This marks the first time in five months that core inflation numbers have rebounded. Numbers had been falling since September of last year.
“Weak global energy prices caused utilities, petroleum products costs to fall, as well as transportation-related outlays in January that offset the surge in cigarette prices,” said Kim Bo-kyoung, head of the statistical agency’s prices statistics division.
The government raised taxes on cigarette prices by some 2,000 won ($1.82) per pack starting this year. This caused cigarette and liquor prices, measured as single category, to surge 49.7 percent on-year.
She said prices generally went up compared to the year before with the exce
ption of transportation and fresh produce, arguing that there is no serious worry that January’s numbers are an indication of a deflation.
Compared to the year before, oil prices plunged 20.4 percent, with prices for farm and industrial goods inching up 0.7 percent and 0.1 percent, respectively.
From a month earlier, oil prices were down 9 percent, with farm and industrial goods moving up 1.7 percent and 0.9 percent.
Prices of all products fell 0.1 percent on-year and rose 0.7 percent on-month. Cost of services gained 1.5 percent from the year before and gained 0.4 percent vis-a-vis December, nudged up by a slight rise in rent, public and private services.
The “living necessities” price index, which measures the cost of key daily products that people consume, contracted 0.3 percent on-year. This is the first time that the index posted minus growth since the statistical agency started compiling such figures in 1995. This number had been falling for five months straight from August.
“Even in this field, if the sharp drop in gasoline prices is not counted, prices actually rose 1.9 percent,” Kim said.
Despite such explanation from the statistical office, the latest numbers are raising concerns that South Korea may be entering a long-drawn-out period of deflation that can adversely affect the country’s growth.
Policymakers have announced a string of expansionary spending policy measures aimed at boosting household income and encouraging investment by businesses, hoping to facilitate the flow of money to help raise consumer prices.
The government forecasts consumer prices will advance 2 percent in 2015.
(Yonhap)