Oil price cap cut inflation by 0.5 percentage points

Record 183,000 tons of Chuseok staples to be supplied

Pan-government probe into price-fixing, monopoly abuse launched

The government said consumer price inflation returned to the 3 percent range in August, rising 3.1 percent year-on-year, but estimated the underlying rate would have been around 2.5 percent had it not been for a base effect stemming from last year's mobile phone bill discounts. A temporary 50 percent cut in mobile service fees in August last year is pulling this year's inflation figure higher, officials said.

The government expects inflationary pressure to ease in September compared with August, but said it would pursue additional price-stabilization measures — including expanded Chuseok discount support for agricultural, livestock and fishery products — to guard against upside risks from Middle East uncertainty and climate-related factors. A pan-government joint task force targeting anticompetitive and consumer-harming practices will also begin full operations.

Shoppers browse a traditional market in Seoul. [Yonhap]
Shoppers browse a traditional market in Seoul. [Yonhap]

At a Wednesday meeting of price-related ministries — which also served as the inaugural session of the pan-government joint task force on consumer harm — Vice Minister Kang Ki-ryong said August consumer prices rose 3.1 percent from a year earlier, driven largely by a base effect from the one-month mobile fee discount last August. The reading was 0.3 percentage points above July's 2.8 percent increase, according to the Ministry of Economy and Finance.

Data released Wednesday by the Ministry of Statistics showed mobile phone service fees surged 26.7 percent year-on-year in August. The comparison reflects a sharp drop in the same month last year, when SK Telecom cut bills by 50 percent for all subscribers for one month as compensation following a hacking incident, sending mobile fees down 21.0 percent from the prior year. With that discount gone from the base, this year's rate jumped sharply.

Stripping out that one-off factor, the government estimated underlying consumer price inflation last month would have been around 2.5 percent. Agricultural, livestock and fishery prices fell 2.6 percent from a year earlier, helped by government discount support and higher output from favorable growing conditions — the steepest decline since November 2019, when prices fell 2.7 percent.

The government's oil price cap also weighed on inflation. The year-on-year increase in petroleum product prices slowed to 14.2 percent in August from 15.5 percent in July. Officials estimated the cap lowered the overall consumer price inflation rate by 0.5 percentage points last month, saying the rate would have reached 3.6 percent without the measure.

While the government expects September inflation to moderate from August, it said it would press ahead with price-stabilization efforts ahead of Chuseok given lingering uncertainties over the Middle East situation and weather conditions.

Under the Chuseok livelihood stabilization package announced Tuesday, the government will inject 103 billion won ($75 million) — a record amount — to offer discounts of up to 40 to 50 percent on agricultural, livestock and fishery products, and supply a record 183,000 tons of 19 key seasonal staples. Shoppers at 300 markets each for agricultural and fishery products will also receive a 30 percent cashback in Onuri gift vouchers on their purchases, capped at 20,000 won per transaction.

The government also plans to explore additional support measures to stabilize agricultural, livestock and fishery prices, including expanded discount programs during the holiday period.

Small and medium-sized enterprises and small business owners will receive 43.4 trillion won in holiday operating funds, while 480 billion won in policy financing will be extended to low-income and vulnerable households over two months. Fuel subsidies linked to oil prices for freight trucks, passenger vehicles and coastal cargo vessels using compressed natural gas or diesel, and tax-exempt fuel for farmers and fishermen, will be extended through the end of the year.

The government will also step up its pan-government response to unfair practices in sectors directly affecting daily life. Officials said the newly activated pan-government joint task force will work to root out anticompetitive behavior — including price-fixing, monopoly abuse and consumer deception — that undermines price stability. The task force will conduct sector-by-sector investigations covering food, clothing and housing, daily necessities and services, education, and energy, while also pursuing related regulatory reforms.


y2k@heraldcorp.com