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South Korea's Inflation Hits 2.2% as Middle East Tensions Fuel Oil Price Surge

South Korea's consumer inflation accelerated to 2.2% year-on-year in March, marking the steepest increase since December. The rise was primarily driven by a 9.9% surge in petroleum product prices, with diesel jumping 17% due to its use in transportation and goods. Global oil supplies have been disrupted by Middle East tensions, particularly the effective closure of the Strait of Hormuz. While fuel and service prices pushed inflation higher, the increase was partially tempered by falling agricultural product prices and a government fuel price cap.

Key Points: S. Korea Inflation Rises to 2.2% on Surging Oil Prices

  • Inflation exceeds 2% target
  • Diesel prices surge 17% on-year
  • Core inflation also at 2.2%
  • Agricultural product prices fell 5.6%
  • Government pledges price stabilization efforts
2 min read

Consumer prices rise 2.2 pc in S. Korea on surging oil prices

South Korea's consumer prices rose 2.2% in March, driven by a 9.9% jump in petroleum costs due to Middle East tensions and supply disruptions.

"Gasoline demand is limited to passenger cars, whereas diesel is used for transportation and goods, which is why the increase was larger. - Lee Doo-won"

Seoul, April 2

South Korea's consumer prices rose 2.2 per cent in March from a year earlier, mainly due to a hike in global oil prices caused by prolonged tensions in the Middle East, government data showed on Thursday.

The reading, which hovers above the government's 2 percent inflation target, marks the steepest on-year increase since December, when inflation stood at 2.3 percent, according to the Ministry of Data and Statistics, reports Yonhap news agency.

The latest rise was driven by a surge in the price of petroleum products, which jumped 9.9 percent from a year earlier, marking the sharpest increase since October 2022, when the price spiked 10.3 percent on-year amid the Russia-Ukraine war.

Notably, diesel and gasoline prices jumped 17 percent and 8 percent on-year, respectively.

"Gasoline demand is limited to passenger cars, whereas diesel is used for transportation and goods, which is why the increase was larger," Lee Doo-won, a ministry official, said.

Global oil prices have risen sharply as the Strait of Hormuz has effectively been closed since U.S.-Israeli strikes on Iran in late February, disrupting global oil supplies. South Korea relies heavily on imports for energy.

Prices of agricultural, livestock and fishery products edged down 0.6 percent, mainly due to a sharp drop in agricultural product prices, which fell 5.6 percent on-year. Prices of livestock and fishery products rose 6.2 percent and 4.4 percent, respectively.

Service prices increased 2.4 percent from a year earlier, driven by higher insurance costs.

Processed food prices rose 1.6 percent on-year in March, slowing from 2.1 percent growth in the previous month, and also marking the lowest growth rate since November 2024.

Prices of sugar fell 3.1 percent on-year after factory prices were cut, and those of flour dropped 2.3 percent on-year.

Core inflation, which excludes volatile food and energy prices, rose 2.2 percent on-year last month, the ministry said.

The government said the increase in consumer prices, despite rising fuel prices, was partly tempered by a fuel price cap system, pledging to continue taking all-out efforts to stabilise prices amid ongoing volatility.

- IANS

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Reader Comments

P
Priya S
Interesting to see the breakdown. Diesel up 17%! That's huge. It directly impacts the cost of transporting goods, which then pushes up prices of everything else. In India, the ripple effect on vegetables and essentials would be immediate. Hope our policymakers are watching.
R
Rohit P
At least their agricultural product prices fell by 5.6%. Wish we had that here! Our tomatoes and onions are always on a rollercoaster. The global situation is tense, but managing local supply chains is key. 🇮🇳
S
Sarah B
The article mentions a fuel price cap system helping to temper the rise. I wonder how effective such measures are in the long run. Sometimes they just delay the inevitable and create budget deficits. A respectful criticism: short-term fixes don't solve structural dependency on imported oil.
V
Vikram M
Core inflation at 2.2% even after removing food and energy is the real concern. It shows price pressures are getting embedded in the economy. Service costs and insurance are going up everywhere. Middle-class families are getting squeezed from all sides. Time to tighten our belts.
K
Karthik V
The Strait of Hormuz situation is worrying. A major chunk of the world's oil passes through there. If disruptions continue, next month's data could be worse. This is why we need to fast-track our solar and wind projects. Jai Hind!

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