CONSUMER PRICES INCREASE 2.6%

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Consumer prices rose 2.6% in July on-year, hitting a new monthly high in just 2 months. Agrolivestock and fishery prices continue to rise, raising concerns ahead of the Chuseok holiday.

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At the supermarket, customers are hesitant to pick up eggs. The prices are still high. Egg prices have gone up more than 50% since last year, rising for 7 straight months. Government's forecast of costs stabilizing in the second half appears to be inaccurate.

[Soundbite] An Soo-yeon(Hwagok-dong, Seoul) : "I used to go for the more expensive quality eggs but with prices going up, I’m just buying cheaper ones now."

Prices of lettuce and watermelon have also spiked. The sweltering heat has negatively affected this year’s harvest. Some instant noodle makers are also set to raise ramyeon prices from this month.

[Soundbite] Kim Kim Yong-mi(Deungchon-dong, Seoul) : "Prices have all spiked. So just a few items easily add up to 100,000-200,000 won."

Dairy farmers have also raised prices this month. This affects a whole range of products including ice cream, cheese, bread and even coffee. With the Chuseok holiday a month away, the government is determined to do its best to rein in produce prices.

[Soundbite] Hong Nam-ki(Finance Minister) : "The gov’t hoped prices would go down. July’s inflation of 2.6% was in part due to price gains in agro-livestock and fisheries."

Some 200 million eggs will be imported over 2 months and more than half of them will directly reach consumers. Supplies of meat and other holiday items will be increased. But the weather and raw material costs remain a key factor. Some experts forecast, the heatwave or typhoons as well as unstable global oil prices could make it difficult to maintain the 2% inflation target.