CONSUMER PRICES JUMP 6%

[Anchor Lead]

Consumer prices jumped 6% last month. An on-year increase in the 6% range is the first since 1998 during the financial crisis. The surge is due to a sharp rise in energy prices as well as service costs such as dining out.

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Fuel taxes have been lowered by full capacity but gas prices still hover above 2,000 won per liter. Diesel is nearly 100 won more expensive than gasoline.

[Soundbite] Jeon Min-gyu(Seoul Resident) : "I don't feel the effects of the fuel tax cut as much. I've never seen diesel so expensive."

Last month, diesel prices jumped more than 50% on-year while gasoline and kerosene prices also saw a significant rise. Various raw materials are costing more these days, and with lifted distancing measures, more people are eating out, raising dining-out expenses. The fastest consumer price growth in 24 years recorded in June can be largely attributed to those two factors. Personal services which include industrial goods such as oil prices have contributed to the latest inflation figure by more than 80%. The inflation rate which was in the zero percent range up until early 2021 has shot up to 6% in just a year and a half. The latest figures don't even reflect the recently raised electricity and gas rates. The public must bear the brunt of further rises. Low-income households are more adversely affected.

[Soundbite] Joo Won(Hyundai Research Institute) : "Low-income households have little room to spare so if prices surge, they become nervous about further hikes, raising uncertainties and jitters."

The Bank of Korea says there are no signs pointing to any relief in oil and grain prices, and that inflation will continue to climb for the time being due to rising demand resulting from increased leisure activities. This means consumer price growth has not yet reached its peak yet.