The consumer price inflation rate in March was 2.2%. Prices of petroleum products rose the most in 3 years and 5 months due to the fallout from the "Middle East war." However, as companies simultaneously cut prices for flour and sugar, and prices of agricultural products fell with increased production driven by rising temperatures, the overall inflation rate remained in the low 2% range.
According to the "March consumer price trends" that the Ministry of Data and Statistics (MODS) released on the 2nd, last month's consumer price index was 118.80 (2020=100), up 2.2% from a year earlier. The pace of price gains had been slowing since Oct. last year, but it turned upward, widening the increase by 0.2 percentage points from Feb. (2%).
Prices rose sharply, centered on energy items affected by the Middle East war. Prices of petroleum products jumped 9.9% from a year earlier. This was the largest increase in 3 years and 5 months since Oct. 2022 (10.3%). Specifically, diesel and gasoline rose 17% and 8%, respectively, the biggest increases in 3 years and 3 months and in 1 year and 2 months.
Lee Doo-won, Deputy Director General for Economic Trend Statistics at the Ministry of Data and Statistics (MODS), said, "Compared with gasoline, which is used only in passenger cars, diesel has more uses such as in transport vehicles, so the price increase appears to have been larger," adding, "However, changes in international airfares due to higher jet fuel prices, the second price ceiling, and the fuel tax cut effect are expected to be reflected in April consumer prices."
Industrial products, including petroleum products, rose 2.7% from a year earlier. This is the largest increase in 2 years and 5 months since Oct. 2023 (3.6%). Despite the rise in petroleum product prices, the low increase in processed foods (1.6%) appears to have curbed the overall rise in industrial product prices. Processed foods posted the smallest increase in 1 year and 4 months since Nov. 2024 (1.3%).
The Deputy Director General said, "There was an effect from the ex-factory price cuts for flour and sugar starting in Feb." Sugar saw the biggest drop in 12 years and 6 months, and flour in 1 year and 6 months.
By contrast, among items with different characteristics from industrial products, agricultural, livestock and fishery products fell 0.6%, and services rose 2.4%, narrowing the month-over-month increase. The Deputy Director General said, "As temperatures rose, production of vegetables and fruits such as strawberries and oranges increased, widening the decline in agricultural products."
By expenditure purpose, the transportation sector rose 5%. This was the largest in 1 year and 8 months since Jul. 2024 (5.2%). This can likewise be seen as the impact of higher global oil prices due to the Middle East war.
The living cost index, which reflects perceived prices and is composed mainly of frequently purchased items, rose 2.3%, widening from the previous month (1.8%). The fresh food index, which reflects "table prices," fell 6.6%, widening the decline from Jan. (-2.7%).
Core inflation, which is calculated excluding the impact of oil prices, showed little change. The index excluding food and energy, the core inflation measure used by the Organisation for Economic Co-operation and Development (OECD), rose 2.2%. Another core measure, the index excluding agricultural products and petroleum products, rose 2.3%. Both core measures narrowed their month-over-month increases.