[EXPLAINER] How SKT data breach pushed inflation up by 0.6 percentage point

Last month's consumer inflation rate in South Korea increased by nearly 0.6 percentage points, according to government data released on Wednesday. This rise can be traced back to a data breach suffered by SK Telecom last year. A report from the Ministry of Data and Statistics reveals that the consumer price index (CPI) stood at 120.05 in August, marking a 3.1 percent increase compared to the same period a year ago.

Inflation had been climbing steadily, rising from 2.6 percent in April to 3.1 percent in May and 3.2 percent in June. However, it experienced a brief respite, falling to 2.8 percent in July before climbing back up to the 3 percent range a month later. While the recent data might appear to signal a resurgence in inflationary pressures, the recent surge is primarily attributed to the diminishing impact of SK Telecom's substantial mobile bill discounts that were introduced last year, following the data breach.

SK Telecom, South Korea's largest wireless carrier, had slashed mobile bills by 50 percent for over 20 million subscribers at the time of the incident. This significant reduction in mobile expenses created a base effect that contributed to the recent increase in consumer inflation. In August last year, approximately 25 million customers were directly affected by the mobile bill discounts.

The source material does not provide additional details on the subsequent effects of the discounts or other factors influencing inflation beyond this specific event.