In July, the consumer price index increased by 2% for the second consecutive month, prompting the Bank of Korea to forecast that the prices of agricultural and livestock products will rise significantly this month. This is due to the expanding uncertainty in prices caused by weather anomalies such as heatwaves and heavy rain.
On the 5th, the Bank of Korea held a "price situation review meeting" chaired by Deputy Governor Kim Woong to examine future price trends. The meeting was attended by Deputy Governor Kim Woong, Lee Ji-ho, head of the Economic Statistics Division, and Shin Seung-cheol, head of the Economic Statistics Division 1.
According to Statistics Korea, the consumer price index for July was 116.52 (2020=100), indicating a 2.1% increase compared to the same month last year. This marks a return to the 2% range for the second month in a row following June's 2.2%. The core inflation, which reflects the underlying price trend, also increased. The index excluding agricultural products and petroleum rose by 2.3%, while the index excluding food and energy rose by 2.0%.
The Bank of Korea evaluated that despite the increase in prices of agricultural, livestock, and fishery products (from 1.5% in June to 2.1% in July), the overall price level slightly decreased to 2.1% due to a drop in petroleum prices (from 0.3% to -1.0%).
Deputy Governor Kim noted, "In August, prices of agricultural, livestock, and fishery products may show a high upward trend due to heavy rains and heatwaves, but the large-scale discounts on communication fees from some telecommunications companies could temporarily reduce the inflation rate significantly."
He added, "In the future, the consumer price inflation rate may continue to experience instability in agricultural, livestock, and fishery product prices due to weather conditions, and uncertainties in external factors remain high," stating that he would closely monitor the price trajectory in the August forecast.
Meanwhile, the Bank of Korea will hold a monetary policy meeting on the 28th to announce a revised economic outlook. In the economic forecast released in May, it had suggested growth rates of 0.8% for this year and 1.6% for next year.