Price situation review meeting held

August inflation driven by telecom discount base effect

Bank of Korea Deputy Governor Lee Ji-ho speaks at the bank's August 2026 economic outlook briefing held at the Bank of Korea in Jung-gu, Seoul, on Thursday. [Bank of Korea]
Bank of Korea Deputy Governor Lee Ji-ho speaks at the bank's August 2026 economic outlook briefing held at the Bank of Korea in Jung-gu, Seoul, on Thursday. [Bank of Korea]

Bank of Korea Deputy Governor Lee Ji-ho said Wednesday that September consumer price inflation is expected to continue its underlying upward trend, driven mainly by core items.

Lee made the remarks at a price situation review meeting held Wednesday morning at the Bank of Korea's main building, where officials assessed recent price developments and the inflation outlook.

Data released Wednesday by the Ministry of Statistics showed that consumer prices rose 3.1 percent in August, up from 2.8 percent the previous month, largely due to a base effect from telecom fee discounts introduced in August last year. The rate of increase in petroleum product prices fell from 15.5 percent to 14.2 percent over the same period. Prices for agricultural, livestock and fishery products swung to a decline of 2.6 percent from a rise of 0.9 percent, reflecting government discount policies.

Core inflation, which excludes highly volatile items, rose 0.8 percentage points from the previous month's 2.6 percent to 3.4 percent, as sustained price increases in personal services and durable goods were compounded by the telecom fee base effect. The lifestyle price index also climbed 0.7 percentage points to 3.2 percent from 2.5 percent, driven by the same base effect.

On August inflation, Lee said the month-on-month increase widened due to the base effect from last year's telecom fee discounts, but that the rise was tempered by a reduction in petroleum product price caps and the government's discount policies for agricultural, livestock and fishery products. "Core inflation surged sharply, as the base effect compounded an already widening increase in durable goods prices," he added.

He said September consumer price inflation would ease from August as the base effect fades, but that the underlying upward trend would persist, centered on core items. He went on to say that consumer prices are expected to continue rising at a high pace, led by core inflation, amid still-elevated uncertainty surrounding the war in the Middle East, the pass-through of cost shocks and expanding demand-side pressures. "We will monitor the price situation with heightened vigilance," Lee said.


kimstar@heraldcorp.com