(2nd LD) Consumer prices up 2.8 pct in July; oil price hike slows

In August 2025, South Korea's consumer prices experienced a 2.8% increase year-over-year in July, data revealed by the Ministry of Food and Statistics. This marked a slowdown from the 3.1% and 3.2% jumps recorded in May and June, respectively. The acceleration in July can be attributed to the stabilization of oil prices, which had been high compared to 2025 levels.

Oil prices contributed to 0.6 percentage points of the overall growth, down from 0.93 percentage points in June. Specifically, diesel and gasoline prices saw 21.5% and 12.6% increases, respectively, in July. Industrial product prices rose 3.7%, with computer and mobile device prices climbing 25.1% and 22.5%, respectively, following chip price hikes.

Agricultural product prices experienced a 0.9% increase, primarily due to higher beef and rice prices. However, overall agricultural product prices fell 2.2% from a year earlier. Service prices increased by 2.6%, driven by a 13.4% rise in insurance costs. Notably, international airfares and overseas travel packages surged 21.7% and 20%, respectively.

Core inflation, excluding volatile food and energy costs, rose 2.6%, the highest since December 2023. First Vice Finance Minister Lee Hyoung-il chaired a meeting on inflation, emphasizing the government's efforts to stabilize prices, including fuel price caps. The caps, introduced in March, were lowered in late June due to reduced geopolitical tensions in the Middle East.

Despite the slowdown, the ministry warns that the impact of previous price increases continues to burden people's livelihoods, urging ministries to tackle inflation's upside risks, including geopolitical uncertainties and the effects of recent heat waves.