August consumer prices up 3.1%, but would have been 2.5% without SK Telecom hack discount

South Korea's consumer price inflation returned to the 3 percent range in August for the first time in two months.

Oil price gains slowed and agricultural, livestock and fishery prices fell, but a base effect tied to SK Telecom's billing discounts last year — which had pushed the comparison baseline unusually low — lifted the headline rate higher this year.

The government forecast that inflation would ease in September, while announcing plans to expand discount support for chuseok agricultural and fishery products and to launch a pan-government crackdown on price-fixing and monopolistic practices.

According to the consumer price trends report for August 2026 released Wednesday by the Ministry of Statistics, the consumer price index stood at 120.05 (base year 2020=100), up 3.1 percent from a year earlier. Month-on-month, prices rose 0.2 percent. The annual inflation rate had been 3.1 percent in May and 3.2 percent in June before easing to 2.8 percent in July, only to climb back above 3 percent in August.

Lee Du-won, a senior statistics official at the Ministry of Statistics, estimated the base effect from the mobile phone fee discount at about 0.58 percentage points. "If that is stripped out, overall inflation would be around 2.5 percent," he said.

Mobile phone service fees rose 26.7 percent year-on-year in August. SK Telecom had offered customers a 50 percent discount on their bills for the entire month of August last year as compensation following a hacking incident. That discount caused mobile phone fees to fall 21.0 percent in August 2025, and the resulting low base inflated this year's comparison.

Public service inflation, which includes mobile phone fees, jumped from 1.4 percent in July to 6.5 percent in August — the highest reading since August 2001, when it reached 7.2 percent. Overall service prices rose 3.7 percent, contributing 2.04 percentage points to the headline inflation rate. Among personal services, overseas group tour costs climbed 14.9 percent and insurance service fees rose 13.4 percent.

The telecom base effect also weighed heavily on core inflation. The OECD-method core index, which excludes food and energy, rose 3.4 percent year-on-year — up 0.8 percentage points from the previous month and the highest since May 2023, when it reached 3.8 percent.

"Because the core index covers fewer items than the overall consumer price index, the base effect shows up more strongly," Lee said, noting that excluding food and energy raises the relative weight of mobile phone fees within the index.

The rate of increase in oil product prices eased from 15.5 percent in July to 14.2 percent in August, and oil's contribution to overall inflation narrowed from 0.60 percentage points to 0.54 percentage points.

The government said its oil price cap policy reduced August's overall inflation rate by 0.5 percentage points, estimating that without the measure, the headline rate would have reached 3.6 percent.

Agricultural, livestock and fishery prices fell 2.6 percent year-on-year, aided by government discount support and higher output — the steepest decline since November 2019, when they dropped 2.7 percent. The drop shaved 0.21 percentage points off the overall inflation rate.

Vegetable prices, however, surged over the month. Fresh vegetable prices were 9.8 percent lower than a year earlier but rose 12.5 percent from the previous month. Cabbage jumped 37.0 percent, spinach 68.2 percent, cucumbers 40.4 percent and lettuce 28.4 percent in a single month. The everyday price index, which tracks frequently purchased items with high household spending weight, rose 3.2 percent year-on-year.

The government said it would intensify price stabilization measures ahead of the chuseok holiday.

The Ministry of Economy and Finance held a price-related ministries meeting — also convened as the first session of the pan-government joint task force on consumer harm — chaired by Vice Minister Lee Kang-ryong on Wednesday to discuss response measures. The government expects September inflation to ease from August's level but acknowledged that risks remain, including Middle East tensions and climate-related factors that could push prices higher.

Under the chuseok livelihood stabilization measures announced Tuesday, the government will inject 103 billion won ($75 million) — a record — into agricultural, livestock and fishery discount programs, offering discounts of up to 40 to 50 percent. It will also supply a record 183,000 tons of 19 key seasonal staples, including cabbage, radish, apples and beef.

At 300 markets each for agricultural and fishery products, buyers will receive 30 percent of their purchase amount back in Onuri gift vouchers, up to a maximum of 20,000 won per transaction. The government also plans to explore additional support measures to stabilize agricultural, livestock and fishery prices beyond existing programs, including expanded discount support during the holiday period.

The government will channel 43.4 trillion won to small and medium-sized enterprises and small business owners as holiday operating funds, and provide 480 billion won in policy financing over two months for low-income and vulnerable households. Fuel cost subsidies for the transport sector and farmers and fishers will be extended through the end of the year.

The government will also step up its response to unfair practices in sectors closely tied to daily life. The pan-government joint task force on consumer harm will be fully activated to tackle price-fixing, abuse of monopoly power and consumer deception. Sector-by-sector investigations covering food, clothing, housing, daily necessities and services, education and energy will be conducted alongside efforts to improve related regulations.