Why Did Consumer Prices Surge by 2.1% in July in South Korea?
Click to start listening
Synopsis
South Korea is facing a significant inflationary trend as consumer prices rose by 2.1% in July, driven by industrial goods and services. This trend raises concerns about the economic landscape, highlighting the impacts of currency depreciation and weather conditions on agricultural prices. Discover how these factors are shaping consumer behavior and economic policy.
Key Takeaways
- Consumer prices increased by 2.1% in July.
- Inflation is driven by costs of industrial goods and services.
- Depreciation of the winner has impacted import prices.
- Processed food prices rose by 4.1% year-on-year.
- Weather conditions have significantly affected agricultural prices.
Seoul, Aug 5 (NationPress) In July, South Korea's consumer prices experienced a growth of over 2 percent for the second month in a row, primarily due to rising costs of industrial goods and services, according to data released by the government on Tuesday.
This key inflation indicator rose by 2.1 percent compared to the same month last year, as reported by Statistics Korea.
Inflation had been above the Bank of Korea's 2 percent target for four months until April but decreased to 1.9 percent in May. It then increased to 2.2 percent in June, as per the Yonhap news agency.
The July increase was largely attributed to the ongoing depreciation of the South Korean won, which raised import costs for industrial goods. Additionally, a consistent rise in service prices contributed to the inflationary pressure.
Specifically, prices for processed food items surged by 4.1 percent year-on-year, adding 0.35 percentage points to the overall inflation rate for July.
While agricultural product prices slightly decreased by 0.1 percent year-on-year, prices for livestock and fisheries products rose by 3.5 percent and 7.3 percent, respectively.
Among fisheries products, mackerel prices surged by 12.6 percent year-on-year.
In the agricultural sector, watermelon prices skyrocketed by 20.7 percent, and prices for other vegetables, like lettuce, increased by 30 percent compared to the previous year.
“Due to extreme heat and heavy rainfall, supply conditions were unfavorable, while demand surged, leading to significant increases in watermelon prices,” stated Park Byung-seon, an official from the statistics agency. “Although fruit and vegetable prices were already elevated last year, this year's year-on-year increase is quite drastic.”
Conversely, prices for petroleum products dropped by 1 percent year-on-year, reversing the previous month's increase.
The service sector maintained its upward trend, recording a 2.3 percent year-on-year growth.
Within this sector, utility costs, including electricity and gas, climbed by 1.6 percent, while water charges increased by 2.7 percent.
In personal services, dining out costs rose by 3.2 percent from the previous year, and non-dining service prices increased by 3.5 percent.
Out of the 39 items that constitute dining out costs, 38 experienced price hikes in July, with only pizza prices remaining stable.
Core inflation, which excludes volatile food and energy prices, rose 2 percent in July, consistent with the previous month’s increase.
Point of View
I view the recent rise in consumer prices as a critical issue that demands attention. With inflation now consistently over the Bank of Korea's target, it is essential to monitor these trends closely. The interplay of global economic factors and local conditions will significantly shape South Korea's economic future, and we must ensure our audience is well-informed.
NationPress
19/08/2025
Frequently Asked Questions
What caused the rise in consumer prices in July?
The rise in consumer prices in July was primarily driven by increased costs of industrial goods and services, along with the depreciation of the South Korean won.
How much did consumer prices increase year-on-year?
Consumer prices increased by 2.1 percent compared to the same month last year.
What are the effects of weather on agricultural prices?
Extreme heat and heavy rainfall have negatively affected supply conditions, leading to significant price increases for agricultural products like watermelons.
What is core inflation?
Core inflation excludes volatile food and energy prices and rose by 2 percent in July, consistent with the previous month.
What sectors contributed to inflation in July?
Inflation in July was influenced by rising prices in the industrial sector, as well as in personal services and utilities.
