SEOUL: South Korea’s consumer prices slowed to the lowest level in nearly three-and-a-half years in August on easing prices of farm produce and global oil.

Consumer prices, a key gauge of inflation, rose 2% on-year last month, data showed yesterday, compared with a 2.6% year-on-year (y-o-y) rise a month earlier, according to the data from Statistics Korea.

August’s figure marked the slowest increase since March 2021, when consumer prices grew 1.9%. It was also the fifth consecutive month that the price growth stayed below 3%.

In January, inflation slowed to 2.8%, dropping below 3% for the first time since July 2023, but edged up to 3.1% in February and stayed at the same level the following month before cooling to 2.9% in April.

The figure then fell to 2.5% in May and 2.4% in June before rising to 2.6% in July.

The government has said that the country is projected to reach the target rate of 2% by around the end of 2024. The Finance Ministry expects prices to rise 2.6%.

“Inflationary pressure was very much weakened by falling global oil prices and the easing of farm produce prices,” agency official Kong Mi-sook said.

Prices of agricultural, livestock and fishery products went up 2.4% y-o-y. Agricultural products, in particular, climbed 3.6%, markedly slowing from the previous month’s 9% increase.

But prices of fruits remained high, with those of apples surging 120.3% and prices of pears going up 17%.

“The country is experiencing a supply shortage of fruits due to poor harvests last year amid unfavorable weather conditions in summer, but prices are expected to stabilise in the coming months,” Kong said.

Prices of petroleum products inched up 0.1% y-o-y in August, slowing from an 8.4% increase a month earlier.

Dubai crude, South Korea’s benchmark, came to US$77.60 per barrel on average last month, falling from July’s US$83.83, according to government data.

Service prices gained 2.3% y-o-y in August. Core inflation, which excludes volatile food and energy prices, added 2.1%, the weakest level since November 2021.

 - ANN