Consumer prices in April climbed to 2.6%, the highest in 1 year and 9 months. This is the fallout from petroleum product prices jumping more than 20% amid the U.S.·Iran war. The Bank of Korea projected that the pace of price increases will expand further in May. The government explained that it eased inflation by implementing a petroleum price ceiling, but as perceived prices have risen sharply, the burden on ordinary people is expected to increase.

According to the ‘April Consumer Price Trends’ released by the Ministry of Data and Statistics on the 6th, the consumer price index for last month was 119.37 (2020=100), up 2.6% from a year earlier. This was the largest increase since July 2024 (2.6%), and the gain widened by 0.4 percentage points from March (2.2%), when the impact of the war was first reflected. After staying below 2.5% throughout last year, the inflation rate fell to 2% in January~February of this year, then has risen for two consecutive months since March, when the war intensified.

Driven by higher international oil prices, petroleum product prices surged 21.9% from a year earlier. This was the highest increase in 3 years and 9 months since July 2022 (35.2%), during the Russia·Ukraine war. The rise more than doubled from the previous month (9.9%). The contribution of petroleum products to inflation also rose sharply to 0.84 percentage points, from 0.39 percentage points a month earlier. Specifically, gasoline increased 21.1% and diesel 30.8%, both the highest since July 2022. As a result, industrial goods prices including petroleum products rose 3.8%, pushing up overall inflation.

There is an assessment that the impact of higher international oil prices is spreading to service prices as well. As the increase in international airfares expanded sharply from 0.8% in March to 15.9% last month, public service prices widened their increase (1%→1.4%). This is because the oil surcharge used to calculate international airfares last month reflected the March rise in global oil prices. While prices for dining-out services rose at a slower pace of 2.6%, engine oil changes (11.6%) and laundry fees (8.9%), which are linked to crude oil or naphtha supply, as well as overseas package tour costs (11.5%), also climbed.

Prices of agricultural, livestock, and fishery products fell 0.5%. Thanks to reductions in factory prices for processed foods, the increase in processed foods narrowed (1.6%→1%). The fresh food index, which reflects table prices, fell 6.1%. Declines in prices of processed foods and agricultural, livestock, and fishery products related to ‘먹거리’ have helped partially offset inflation.

The government estimated that the petroleum price ceiling and the fuel tax cut lowered the overall inflation rate by 1.2 percentage points. Lee Doo-Won, the official in charge of economic trends and statistics deliberation at the ministry, said, “Compared with other countries, the increase in petroleum products was smaller,” adding, “We believe the price ceiling had the effect of easing consumer prices.”

However, there is an assessment that the burden on ordinary people is growing, as the cost of living index, which reflects perceived prices, rose to 2.9% last month from 2.3% in March, outpacing overall consumer prices. This is because it is composed of items that consumers purchase frequently, giving greater weight to gasoline, diesel, and similar items.

Prices are expected to continue rising in May. Yu Sang-Dae, a Bank of Korea deputy governor, said at the price situation review meeting that day, “With the base effect on agricultural, livestock, and fishery prices added, inflation in May is expected to increase by a larger margin.” The increase in domestic airfare fuel surcharges is also scheduled to be reflected in prices starting in May.

An official at the Ministry of Finance and Economy said, “With weather and shipment volumes favorable at present, we will watch whether there is an increase due to the base effect on agricultural products,” adding, “The government continues efforts to contain inflation in the petroleum segment, and where cooperation from industry is needed, we will request it so as to lessen what the public feels.”