South Korea's inflation rate reached 2.2% in March, with oil product prices rising nearly 10%

The data released by South Korea’s Ministry of Data and Statistics on Thursday showed that, affected by a rise in global oil prices caused by ongoing tensions in the Middle East, South Korea’s consumer price index (CPI) in March rose 2.2% year over year.

The figure is higher than the government’s 2% inflation target, and is also the largest year-over-year increase since December last year, when the inflation rate was 2.3%.

The latest increase was driven by a surge in petroleum product prices. In March, petroleum product prices rose 9.9% year over year, the biggest jump since October 2022, when petroleum product prices surged 10.3% year over year due to the impact of the Russia-Ukraine conflict.

Notably, diesel and gasoline prices rose 17% and 8% year over year, respectively.

Since late February, when the U.S. and Israel launched airstrikes against Iran, the Strait of Hormuz has effectively been blocked, disrupting global oil supplies and sharply pushing up global oil prices, while South Korea is heavily dependent on energy imports.

Prices for agricultural, livestock, and fisheries products fell slightly by 0.6%. The main reason was that agricultural product prices dropped sharply by 5.6% year over year. Livestock and fisheries product prices rose 6.2% and 4.4%, respectively.

Service prices rose 2.4% year over year, mainly due to higher insurance costs.

South Korea’s statistical office said that in March, the core CPI, which excludes food and energy prices with relatively large fluctuations, also rose 2.2% year over year.

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Editor: Yu Jian SF069