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(2nd LD) Consumer price growth at 1-year high in Feb.

All News 10:02 March 04, 2021

(ATTN: UPDATES with more details in paras 10-12, 16)
By Kim Soo-yeon

SEOUL, March 4 (Yonhap) -- South Korea's consumer prices grew at the fastest pace in one year in February due largely to a sharp rise in prices of agricultural and livestock products, data showed Thursday.

The consumer price index rose 1.1 percent on-year in February, compared with a 0.6 percent on-year gain the previous month, according to the data compiled by Statistics Korea.

It marked the fastest on-year gain since February last year, when the price index rose 1.1 percent.

Consumer inflation also rose above 1 percent for the first time since September last year.

Compared with a month earlier, the index grew 0.5 percent last month, compared with a 0.8 percent on-month gain in January.

Core inflation, which excludes volatile food and oil prices, rose 0.3 percent on-year last month.

Eggs are displayed at a supermarket in Seoul on March 1, 2021. (Yonhap)

Eggs are displayed at a supermarket in Seoul on March 1, 2021. (Yonhap)

The country's overall inflationary pressure has remained subdued amid the COVID-19 pandemic. But recent hikes in food and oil prices are spawning concerns that inflation may pick up amid an economic slowdown.

Last month, prices of agricultural, livestock and fisheries products advanced 16.2 percent on-year, the fastest gain in 10 years.

Prices of farm products jumped 21.3 percent as the production of vegetables was dented by cold weather, according to the statistics agency.

Prices of eggs soared 41.7 percent on-year last month, affected by the outbreak of bird flu here and demand related to the Lunar New Year holiday.

"Amid squeezed production and the outbreak of avian influenza, holiday-linked demand pushed up prices of vegetables, fruits and livestock products last month," Eo Woon-sun, a senior Statistics Korea official, said at a press briefing.

Prices of petroleum products declined 6.2 percent on-year, smaller than an 8.2 percent fall in January, as oil prices picked up.

A rise in housing prices showed no letup despite the government's efforts to stabilize home prices. Housing prices rose 0.9 percent from a year earlier in February, marking the 10th straight month of on-year gains.

The statistics agency said the consumer price growth is expected to pick up as inflationary pressure from both the demand and supply side lingers.

"But as authorities are expected to make policy efforts (to stabilize inflation), the situation does not appear to be worrisome," a statistics agency official said.

The finance ministry said the March consumer inflation will likely be affected by supply of farm and livestock products, oil price trends, and policy support from free education for high school students.

Still, the country's low inflationary pressure is expected to give South Korea's central bank more room to maintain an accommodative monetary stance.

The Bank of Korea (BOK) froze its policy rate at a record low of 0.5 percent in February amid lingering economic uncertainties over the pandemic. The bank aims to keep inflation at 2 percent over the medium term.

The BOK revised up its 2021 inflation outlook to 1.3 percent from its earlier estimate of 1 percent, citing an economic recovery and a pickup in oil prices.

This photo, taken Feb. 28, 2021, shows gas prices at a filling station in Seoul. (Yonhap)

This photo, taken Feb. 28, 2021, shows gas prices at a filling station in Seoul. (Yonhap)


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