South Korea’s consumer prices jumped 2.0 percent in January on year, the biggest gain in more than four years, due largely to upset in the supply-end from spike in egg prices after disastrous spread of aviation flu wrecked the poultry industry and rebound in oil prices. Fresh food prices became expensive on seasonal demand ahead of the Lunar New Year’s holiday, the country’s biggest annual family gathering.

According to data released by Statistics Korea Thursday, the nation’s consumer price index (CPI) rose 2.0 percent last month from a year earlier. It is the biggest year-on-year gain since 2.1 percent of October 2012.

Last month’s surge in headline index comes amid stagnant economic growth and income a well as high unemployment to make up the dangerous recipe for stagflation and pose a dilemma for the upcoming central bank’s monetary policy meeting on February 23.

Although the gains have been led mostly from unexpected setback on the supply front, policymakers may have to consider inflationary pressure gaining momentum as oil prices are expected to keep strengthening and push up producer prices.

Egg prices soared 62 percent last month from a year ago and 8.7 percent from December as the worst-ever outbreak of bird flu severely damaged chicken farms. Prices of farm produces jumped - radish prices up 113.0 percent, cabbage 78.8 percent, and carrot 125.3 percent on year - ahead of the Lunar New Year’s holiday.

Prices of agricultural, livestock and fishery products gained 8.5 percent in January from a year-ago, sending the headline index up by 0.67 percentage points.

Petroleum-related prices rose 8.4 percent on year due to rebound in oil prices and bumped up the benchmark CPI by 0.36 percentage points.

Service prices climbed 2.2 percent on hikes in utility fees, affecting the headline inflation by 1.21 percentage points.

The core inflation excluding oil and farm produces gained 1.5 percent in January from a year ago. The CPI without food and energy, the standard by the Organization for Economic Cooperation and Development (OECD), increased 1.7 percent.

Prices for living necessaries rose 2.4 percent from a year earlier, highest since 2.5 percent of February 2012. The fresh food index that includes vegetables, fruits and fish ascended 12.0 percent on year, maintaining double-digit on-year growth since September 2016.

By Kim Gyu-sik

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