Roundup: S. Korea's headline inflation hits 9-year high in May

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SEOUL, June 2 (Xinhua) -- South Korea's headline inflation hit a nine-year high last month as higher prices for farm goods and oil products raised supply-side inflationary pressure, statistical office data showed Wednesday.

Consumer price index (CPI) stood at 107.46 in May, up 2.6 percent from a year earlier, according to Statistics Korea. It was the fastest increase in over nine years since April 2012.

The consumer price inflation topped the Bank of Korea (BOK)'s mid-term inflation target of 2 percent for the second consecutive month.

It was attributed to the low base effect. The CPI fell 0.3 percent in May last year on a yearly basis amid the economic downturn from the COVID-19 pandemic that reduced demand-side inflationary pressure.

The supply-side inflationary pressure mounted this year, lifting the headline inflation from 0.6 percent in January to 1.1 percent in February, 1.5 percent in March, 2.3 percent in April and 2.6 percent in May respectively.

The BOK expected the CPI to rise 1.7 percent in the first half and 2.0 percent in the second half each in 2021.

The central bank indicated a possible policy rate hike later this year depending on economic situations, after leaving its key rate unchanged at an all-time low of 0.50 percent last week.

Price for agricultural, livestock and fishery products spiked 12.1 percent in May from a year earlier, keeping a double-digit growth for five months in a row.

Agricultural product price surged 16.6 percent on the bad crop, and livestock product price advanced 10.2 percent in the aftermath of avian influenza (AI). The fishery product price added 0.5 percent.

Price for industrial products, including oil products, gained 3.1 percent in May on a yearly basis, logging the highest in nine years since May 2012.

Oil product price soared 23.3 percent last month, marking the highest in nearly 13 years since August 2008. The oil product price lost ground last year owing to the pandemic shock.

Price for electricity, tap water and natural gas declined 4.8 percent in May from a year earlier on the electric charges cut, but services price increased 1.5 percent on higher private services price.

Private services price rose 2.5 percent in May, recording the highest in over two years since February 2019. It came as higher farm goods price raised eating-out cost.

Public services price shrank 0.7 percent on the back of the increased welfare policy.

Housing rent, including Jeonse and monthly rent, climbed 1.3 percent in May from a year earlier, posting the highest in three and a half years since November last year.

Jeonse is the country's unique contract between two households where a landlord grants the two-year residential right to a tenant who in turn lends a certain amount of money, or deposit, to the landlord.

Cost for food and non-alcoholic beverage advanced 7.4 percent, and the reading for the lodging and eatery services rose 2.0 percent. Expense for communications and education slipped 2.1 percent and 0.8 percent each last month.

Core consumer price, which excludes volatile agricultural and oil products, went up 1.5 percent in May from a year earlier. It was the highest in over three years since September 2017.

The OECD-method core price, which excludes food and energy cost, increased 1.2 percent last month.

The fresh food index, which gauges price for fish, shellfish, fruit and vegetable, jumped 13.0 percent in May.

The livelihood items index, which measures price for daily necessities, picked up 3.3 percent in May, the highest in over three years since August 2017. Enditem

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