Roundup: S.Korea's headline inflation stays below 1 pct for 6 months

0 Comment(s)Print E-mail Xinhua, July 2, 2019
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SEOUL, July 2 (Xinhua) -- South Korea's headline inflation stayed below 1 percent for six straight months to June on lower oil product price and the expanded welfare policy such as free school meal and school uniform, a government report showed Tuesday.

The consumer price index stood at 104.88 in June, up 0.7 percent from a year earlier, according to Statistics Korea.

The consumer price inflation hovered below 1 percent for six months since January, posting the longest low inflation since 2015 when the headline inflation stayed below 1 percent for 10 months through November of that year.

For the first six months of this year, the consumer price gained 0.6 percent compared with the same period of last year, marking the lowest in four years.

The prolonged low inflation was attributed to cheaper crude oil and the expanded welfare policy.

The oil product price declined 3.2 percent in June from a year earlier, pulling down the overall headline inflation by 0.14 percentage points. Prices for gasoline and diesel contracted 5.3 percent and 1.7 percent each.

Public services price dipped 0.2 percent in the month on the expanded welfare policies, including the provision of free school tuition, meal and uniform by some of municipal governments.

Costs for school meal and uniform tumbled over 40 percent nationwide, leading the public services price to fall for six straight months through June.

Housing rent shed 0.2 percent last month, marking the biggest fall since February 2006 on the government's efforts to control speculative investment in the real estate market.

Private services price climbed 1.9 percent on a 15 percent hike in taxi fare, but mobile phone charges declined 3.5 percent on the government's measures to reduce burden for a high phone bill.

Services price, including public and private services, added 1 percent in June from a year ago, pulling up the overall headline inflation by 0.55 percentage points.

Price for electricity, tap water and natural gas went up 1.3 percent in the month, raising the overall inflation by 0.05 percentage points.

Prices for agricultural, livestock and fishery products increased 1.8 percent in June, lifting the headline inflation by 0.13 percentage points. Prices for ginger, brown rice and sticky rice rose fast, but those for sweet potato, garlic and white radish declined in the month.

The so-called livelihood cost, which gauges prices for major daily necessities, gained 0.8 percent, but the fresh food index, which measures costs for fruit, vegetable, fish and shellfish, was unchanged last month.

The core consumer price index, which excludes volatile agricultural and oil products, added 0.9 percent in June from a year earlier, staying below 1 percent for the fourth consecutive month.

The OECD-method core price index, which omit volatile food and energy costs, rose 0.7 percent last month, posting the lowest in about two decades.

The low inflationary pressure reduced burden for the Bank of Korea (BOK) to cut its benchmark interest rate as the BOK recently indicated a possible rate cut in the near future to bolster the export-driven economy.

Export, which accounts for about half of the economy, kept sliding for the seventh consecutive month through June.

Hit by the continued export fall, the country's real gross domestic product (GDP), adjusted for inflation, contracted 0.4 percent in the first quarter from three months earlier.

The statistical office forecast that the inflation would stay low in the second half given the planned cut in electricity charges in summertime and the expected free school tuition by some of local governments. Enditem

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