Near Zero Inflation
Statistics Korea announced on Nov. 3 that the consumer price index rose by 0.9 percent from a year ago last month. The rate of increase is the highest since November last year, when it reached 1.0 percent, but remained below 1.0 percent for 11 months in a row. In addition, it fell short of the Bank of Korea’s target of 2.5 percent to 3.5 percent for the 40th consecutive month.
The actual increment is slightly over 0 percent when the effect of the increase in the price of cigarettes implemented earlier this year, which accounts for 0.58 percentage points, is taken into account.
The near-zero inflation is likely to continue to the end of this year. Last month, the Bank of Korea estimated this year’s inflation rate at a record low of 0.7 percent and the Korea Development Institute gave an estimate of 0.5 percent. For reference, Korea recorded its lowest inflation rate, 0.8 percent, in 1999 since the beginning of records in 1965.
Despite the low inflation rate, public utility charges closely associated with the people’s daily lives showed an overall increase. For examples, city bus fares rose 9 percent, subway fares increased 15.2 percent, and sewage fees and the prices of vegetable, fruit and fish went up by 14.4 percent and 3.7 percent, respectively. Meanwhile, the price of gasoline fell 15.9 percent and that of diesel declined by 20.9 percent. Electricity, water and gas bills showed a decrease of 7.2 percent, too.