The first-quarter service inflation rate this year was the highest of the past three quarters. If rising oil prices continue, some forecast the upward pressure could grow in the second quarter.
According to consumer price trends from the Ministry of Data and Statistics (MODS) on the 5th, the first-quarter service price index was 115.96 (2020=100). That was up 2.4% from a year earlier.
The service inflation rate slowed from 2.4% in the second quarter of last year to 1.9% in the third quarter, then rebounded to 2.3% in the fourth quarter and returned to 2.4% in the first quarter of this year, extending the upward trend.
During the same period, international airfare rose 2.3%. However, because the fuel surcharge increase applied from April was not reflected, the pace of increase could widen in the second quarter.
In fact, this month's fuel surcharge reportedly rose to about three times the previous month's level. A fuel surcharge is a fee that airlines add to ticket fares to offset expense increases caused by higher oil prices.
On a one-way international basis, Korean Air Lines set a maximum fuel surcharge of 303,000 won, and Asiana Airlines set 251,000 won. That is a sharp rise from 99,000 won and 78,600 won, respectively, last month. The increase is analyzed to reflect about a 60% rise in the average price of Singapore jet fuel, which is the basis for calculating fuel surcharges.
Choi Ji-uk, a researcher at Korea Investment & Securities Co., said, "Due to the fuel surcharge hike, domestic airfares are expected to rise by about 1% to 3% and international fares by about 3% to 15%," and noted, "It will act as an upward factor of about 0.06 percentage point on service prices."
Meanwhile, as international oil prices continue to climb, the fuel surcharge applied in May could also see an additional increase. The May fuel surcharge will reflect the average Singapore jet fuel price from Mar. 16 to Apr. 15 and is scheduled to be finalized and announced on the 16th and after.