S. Korea's inflation rises 2.1% on processed food, seafood in July

Inflation was up 2-point-1 percent on year in July driven by processed food costs.

Our correspondent Moon Ji-young covers the latest findings.

Korea's consumer prices saw an increase in the two-percent range in July for the second straight month.

Data from Statistics Korea on Tuesday showed that the country's consumer price index, a key gauge of inflation, rose 2-point-1 percent in July year-on-year.

Inflation had remained above the Bank of Korea's 2 percent target for four consecutive months through April, subsequently seeing a dip in May before edging up again in June.

"While the rise in agricultural, livestock and fishery product prices expanded due to heat waves and heavy rain, the slowdown in the pace of increases for personal services---excluding dining out---alongside a shift to a decline in petroleum prices, led to a 0.1 percentage point decrease from the previous month."

Prices of processed food products jumped over 4 percent due to factory price increases, adding point-3-5 percentage points to July's overall inflation.

Agricultural product prices edged down point-1 percent, however, with a notable soaring of watermelon prices by over 20 percent.

The agency noted that extreme heat and heavy rainfall resulted in unfavorable supply conditions, while demand rose sharply.

Prices of seafood products rose over 7 percent, while mackerel prices climbed more than 12 percent. The agency points to a decline in catches caused by rising sea temperatures.

Prices of livestock grew 3-point-5 percent, including a significant increase in domestic beef, which is highly sought after thanks to livelihood recovery consumption coupons distributed by the government.

In contrast, oil prices fell 1 percent, reversing an increase in the previous month, amid falling international crude prices.

During a review of price trends on the same day, the Bank of Korea noted that prices of farm produce are expected to rise rapidly due to unfavorable weather conditions.

It pledged to closely monitor the inflation path in response to high uncertainties surrounding external conditions.

The central bank also added that a significant slowdown in price growth could occur this month, affected by planned bill discounts and other services by major mobile carriers.

Moon Ji-young. Arirang News.