The consumer price index, which fluctuated around 2%, fell to 1.7% in August. This is the lowest growth rate in 9 months. However, it is difficult to discuss price stability as prices have not generally decreased; rather, this is due to last month's hacking incident at SK Telecom, which offered a 50% discount on communication fees for all subscribers.
Excluding the discount factor from SK Telecom, the consumer price index for August is 2.3%. This is the highest level in 13 months, driven by rising prices of rice and pork.
◇ SK Telecom's 50% discount event slows consumer price index growth
According to the 'August 2025 Consumer Price Trends' released by the Statistics Korea on the 2nd, last month's consumer price index was 116.45 (2020=100), which represents a 1.7% increase compared to August of last year. The consumer price index growth rate, which had been oscillating around 2% this year, has stalled.
Public services, including mobile phone fees, pulled the overall price down by 0.59 percentage points (p). Following the leakage of personal data from 23 million customers, SK Telecom implemented a compensation plan that charged all customers only half of their communication fees last month. As a result of SK Telecom's actions, mobile phone fees decreased by 21% compared to the same month last year, while the public services sector, which includes mobile phone fees, fell by 3.6% during the same period.
Mobile phone fees are an item that most people incur as fixed costs, so price fluctuations are not significant. This has led the public services sector to record its largest drop since October 2020 (-6.0%). At that time, the government provided 20,000 won support to youth (ages 17 to 34) and the elderly (aged 65 and over) for their mobile communication costs to alleviate the economic burden caused by COVID-19.
Excluding temporary factors such as the compensation plan from SK Telecom, the Statistics Korea estimates that last month's consumer price index growth will reach 2.3%. This is the highest growth rate in 13 months. Deputy Director General Lee Do-won stated, "This month, the growth rate of the consumer price index has slowed due to fee reductions from some communication companies," and explained, "When excluding temporary factors, a growth rate of 2.3% is the highest since July of last year (2.6%)."
The drop in international oil prices, which led to a 1.2% decline in petroleum prices compared to a year ago, has also contributed to the slowdown in consumer price index growth.
◇ Soaring prices of pork and mackerel... Increased burden on food prices
Among all sectors last month, the notable increase was in agricultural, livestock, and fishery products. Prices for agricultural, livestock, and fishery products surged by 4.8% compared to the same month last year, marking the highest increase in 13 months since July of last year (5.5%).
In particular, livestock prices rose by 7.1%, driving the increase in agricultural, livestock, and fishery products. The number of animals slaughtered and import volumes decreased while demand increased, resulting in a 9.4% rise in pork and 6.6% in domestic beef.
The prices of fishery products also increased by 7.5%. This was due to warmer water temperatures leading to a decrease in catch volumes. The preferred size of mackerel for Korean consumers is large; however, due to the heatwave, only smaller sizes were caught, leading to a 13.6% increase in mackerel prices compared to the same month last year. Agricultural products rose by 4.8% compared to August of last year, driven by increases in the prices of rice (11.0%) and glutinous rice (45.6%).
Processed food prices also increased by 4.2% compared to the same month last year, following the end of certain discount events on some items. Earlier this year, the growth rate was around 2-3%, but from April to last month, it has shown a consistent growth rate above 4% for five consecutive months. Significant contributors to the rise in processed food prices included bread (6.5%), coffee (14.6%), ham and bacon (11.3%), and kimchi (15.5%).
The Deputy Director General noted, "August sees increased demand for school meals (including pork and beef) with the start of the school year, contributing to rising prices," and added, "The consumption coupons issued in July for people's livelihood recovery likely also increased demand."
However, the Ministry of Economy and Finance does not consider the people's livelihood recovery consumption coupons to be a decisive factor in the price increase. Lim Hye-young, head of the price policy division at the Ministry of Economy and Finance, stated, "Retail sales indices show signs of a recovery in domestic consumption, but the recovery is not robust," adding that the influence of the people's livelihood recovery consumption coupons and the supplementary budget on price increases is limited.