The inflation rate this month is expected to exceed the 6% level for the first time since the financial crisis in November 1998.
According to Statistics Korea on the 27th, consumer prices surged 5.4% last month, the highest in 13 years and 9 months since the 2008 global financial crisis. Considering the trend of producer prices, which moves regarding a month ahead of consumer prices, it is highly likely that this month’s inflation will exceed 6%. Kim Jeong-sik, a professor of economics at Yonsei University, said, “The flow of producer prices being passed on to consumer prices continues. said
In particular, electricity, gas, and water rates do not account for a small proportion of consumer prices, and as they can raise production costs for companies, the high inflation situation is expected to worsen. Electricity, gas and water rates rose 9.6% last month, the highest rate of increase since statistics began to be compiled in January 2010. This is because the electricity rate rose 11.0% last month following the April increase was reflected, and the city gas rate rose 11.0% from April to May. Analyzing the cause of the inflation rate (5.4%) in May, the contribution of electricity, gas and water reached 0.32 percentage points. It means that 6% of the recent inflation is due to electricity, gas and water rates. From next month, the price pressure from public utility bills will increase. This is because the government decided to raise electricity rates in the third quarter on the 27th, and additional increases in gas rates were confirmed in July and October according to the fuel cost index system.
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