Consumer prices rose 2.8% in July, marking a return to the 2% range for the first time in three months. The government estimates that the reduction in fuel price caps lowered the inflation rate by approximately 0.3 percentage points.
On August 4, the Ministry of Economy and Finance held the 72nd meeting of vice ministers on price issues, chaired by First Vice Minister Lee Hyung-il, to discuss July's consumer price trends, potential inflation risks, and strategies for addressing processed food prices.
In July, consumer prices increased by 2.8% compared to the same month last year. This represents a decrease of 0.4 percentage points from June's 3.2%, marking a slowdown to the 2% range for the first time since April.
Compared to the previous month, consumer prices fell by 0.2%, the first month-on-month decline in eight months.
Declines in the prices of agricultural, livestock, and marine products, as well as fuel, contributed to the overall decrease. Agricultural and marine product prices fell by 0.7%, while fuel prices dropped by 5.3%. Year-on-year, the increase in agricultural and marine products decreased from 3.2% in June to 0.9% in July, and fuel prices fell from 24.7% to 15.5%.
Vice Minister Lee stated, "In July, consumer prices fell month-on-month for the first time in eight months, and the year-on-year increase rate eased to the 2% range for the first time in three months. Thanks to policies such as the largest-ever discount support and efforts to stabilize living costs, both agricultural and marine products and fuel prices decreased compared to the previous month."
The government believes that the seventh reduction in fuel price caps, implemented on June 27, contributed to the easing of inflation. By lowering the cap by 150 won per liter, the July consumer price inflation rate was estimated to be reduced by about 0.3 percentage points.
In contrast to the Eurozone, where the inflation rate rose from 2.8% in June to 2.9% in July due to rising energy prices, domestic prices showed a downward trend, according to the government.
However, in August, the base effect from communication costs is expected to push prices back up. The rise in mobile phone fees, due to discounts implemented last August, is projected to increase the overall consumer price inflation rate by about 0.8 percentage points this August.
Uncertainties from the Middle East conflict, extreme heat, and potential increases in food prices are also cited as upward pressure on inflation.
Vice Minister Lee emphasized, "Despite the easing trend, the accumulated increases have kept prices at a high level, and the burden on households remains significant. We must maintain vigilance and make every effort to address this situation."
The government will continue the price cap policy and on August 4 will select additional 'good gas stations.' It plans to secure crude oil imports and stockpiling capacity to stabilize the supply and prices of fuel.
Discount events for all agricultural, livestock, and marine products will continue this month, along with efforts to import eggs and mackerel. If prices for mackerel, hairtail, or squid rise, the government plans to directly purchase and release discounted quantities. The supply trends of vegetables and farmed fish, which are sensitive to extreme heat and heavy rain, will also be closely monitored.
The government is set to announce measures to stabilize prices of essential goods and alleviate burdens on vulnerable groups in preparation for the Chuseok holiday next month.
* This article has been translated by AI.
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