South Korea’s September Inflation Eases to 2.9% as Fuel Costs Stay High

South Korea’s annual consumer inflation eased to 2.9% in September, returning below 3% but remaining well above the Bank of Korea’s 2% price-stability target as fuel and technology products continued to climb sharply.

The consumer price index stood at 120.43, based on a 2020 benchmark of 100, according to data released Thursday by Statistics Korea. The annual rate had risen to 3.1% in August after registering 2.8% in July. Inflation has remained elevated for about six months following increases linked to the war in the Middle East.

Petroleum products were a major source of pressure, rising 14.8% from a year earlier after a 14.2% increase in August. The government estimated that its ceiling on petroleum prices reduced the headline inflation rate by 0.6 percentage point. Without that measure, officials said September inflation could have reached 3.5%.

Prices for processed food gained 2.1% as higher producer prices filtered through to consumers. Durable goods also became more expensive. Computer prices surged 27.4%, reflecting semiconductor costs, while mobile phone prices increased 8.3% as new products, including recent Galaxy and iPhone models, entered the market. Officials said computers, mobile devices and processed food contributed to stronger underlying price pressure.

By contrast, agricultural, livestock and fisheries prices fell 0.3% overall and reduced the headline rate by 0.03 percentage point. Agricultural products were 4% cheaper than a year earlier, helped by increased fruit shipments and government-backed discounts ahead of the Chuseok holiday. Fruit prices dropped 10.9%, including declines in apples, peaches and grapes. Vegetable prices were unchanged overall, although pumpkin prices rose 46.9%.

Livestock and fisheries prices moved in the opposite direction, increasing 3.7% and 4.5%, respectively, as supplies tightened and holiday demand grew. The government said discount support also helped contain food costs.

Measures of underlying inflation remained above target. The index excluding agricultural products and petroleum rose 2.7%, while the measure excluding food and energy advanced 2.8%. The living necessities index, designed to reflect frequently purchased goods and services, increased 2.5%. Fresh food prices declined 3.3% from a year earlier.

The figures indicate that the retreat below 3% has not eliminated broad price risks. Energy costs remain the most visible concern, while increases in processed food and consumer electronics are adding pressure beyond volatile fuel and farm products.