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(2nd LD) S. Korea's consumer prices up 4.8 pct in Feb.; hike in utility costs hits record high

Economy 09:44 March 06, 2023

(ATTN: UPDATES with report from finance ministry in paras 13-15)
By Kang Yoon-seung

SEOUL, March 6 (Yonhap) -- South Korea's on-year growth in consumer prices fell below 5 percent for the first time in 10 months, data showed Monday, although the hike in utility costs hit yet another fresh high.

Consumer prices, a key gauge of inflation, rose 4.8 percent last month from a year earlier, compared with 5.2 percent growth posted in January, according to the data from Statistics Korea.

Inflation stayed above 2 percent -- the central bank's inflation target over the medium term -- for the 23rd straight month in February.

The prices of utility services went up 28.4 percent on-year in February to set a new high amid soaring energy prices sparked by the prolonged war between Russia and Ukraine. It marked a slight rise from the 28.3 percent growth tallied a month earlier.

South Korea depends heavily on imports for its energy needs.

The prices of agricultural, fisheries and livestock products moved up 1.1 percent on-year last month.

Industrial product prices increased 5.1 percent on-year, due mainly to rises in diesel and bread costs, which advanced 17.7 percent and 4.8 percent, respectively. It was nevertheless lower than the 6 percent growth posted in January.

Those of gasoline and computers, on the other hand, moved down 7.6 percent and 6 percent, respectively.

Prices of personal services increased 3.8 percent on-year, due to higher insurance and housing management costs.

Core inflation, which excludes volatile food and energy prices, rose 4 percent on-year last month, compared with a 4.1 percent rise tallied in January.

Prices of daily necessities -- 144 items closely related to people's everyday lives, such as food, clothing and housing -- climbed 5.5 percent on-year last month, slightly slowing from 6.1 percent tallied in January.

"With global prices of raw materials also showing signs of an increase following the reopening of the Chinese economy, uncertainties still remain high," a Statistics Korea official said.

The finance ministry echoed the view, pointing out the country still needs to keep a watchful eye on prices of food and services.

"Although uncertainties linger in different sectors, the inflation is set to show more clear signs of a slowdown in the near future, unless there are any other external shocks," Finance Minister Choo Kyung-ho also said during a meeting with economy-related ministers.

"However, considering that the inflation level still remains high and it places a heavy burden on people's lives, the government will spare no efforts to speed up the slowdown," Choo added.

Last month, the Bank of Korea kept the benchmark interest rate unchanged at 3.5 percent for the first time in 10 months as worries are growing that aggressive monetary tightening could hurt economic growth.

The central bank previously had carried out seven straight rate hikes since April last year to tame inflation.

Shoppers wait in line to purchase discounted products at a supermarket in southern Seoul on Feb. 28, 2023. (Yonhap)

Shoppers wait in line to purchase discounted products at a supermarket in southern Seoul on Feb. 28, 2023. (Yonhap)


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