Bank of Korea: "August slowdown in inflation is temporary… will return to around 2% in September"

Kim Woong, Deputy Governor of the Bank of Korea, said on the 2nd, "The September inflation rate will rise to around 2% as temporary downward factors disappear."

The deputy governor made the remark at a meeting to review price developments at the Bank of Korea that morning, saying the fall in the August consumer price inflation rate to the 1% range was temporary.

He analyzed that, "Despite sharp rises in agricultural, livestock and fishery product prices due to heavy rains and heat waves in August, as initially expected, the temporary discount on telecommunication charges reduced the increase by 0.4% percentage points (P) compared with July (2.1%)."

He also explained, "Going forward, taking into account rising agricultural, livestock and fishery prices, low demand pressures, and stable international oil prices, consumer prices will continue to rise around 2% for the time being."

According to 'Consumer Price Trends' released by Statistics Korea that day, the consumer price index for August was 116.45, up 1.7% from August last year. It was the smallest increase in nine months since last November (1.5%).

SK Telecom, which experienced a hacking incident that led to large-scale subscriber losses, discounted telecommunication charges by 50% for more than 20 million subscribers during August, lowering the overall inflation rate by 0.42% percentage points (P).

Excluding the effect of lower mobile phone charges from SK Telecom's fee discounts, the August consumer price inflation rate would likely have been 2.3%.

Oh Se-sung, Hankyung.com reporter sesung@hankyung.com