Magazines Out, Smart-Phone Repairs In: South Korea’s CPI Revamp
(Bloomberg) -- South Korea said it will cut the number of items in its consumer price index basket to 462 from 481, adding products that consumers are spending more on while removing those that are no longer a major household item.
The CPI basket is updated every five years to reflect social and economic changes. The base year will be shifted to 2015 from 2010, according to an e-mailed statement from the statistics office. The new CPI gauge will be released December 2016, and figures from January 2015 will be revised at that time.
Among the 18 items to be added are blueberries, pasta noodles, paprika peppers and fees to fix mobile phones and computers, according to the statement. Magazines, paper dictionaries, ketchup and vaccination fees -- which are increasingly covered by the government -- are among those being cut. Some other items will be merged or divided.
South Korea's CPI also will reflect online prices for some products. The weighting of each item will also be revised when the government releases new figures at the end of the year. New cities like Sejong will be included to reflect changes in demographics.
The revision's impact on CPI will become clearer once the government finalizes the change in weightings, said Woo Young Jae, a director at the statistics office. Price gains moderated when the government changed the base year to 2010 from 2005, mainly because of the exclusion of gold rings then, Woo said.
South Korea's consumer prices rose 0.8 percent in June from a year earlier, trailing the central bank's 2 percent target. Bank of Korea Governor Lee Ju Yeol will hold a press briefing on July 14 to explain why inflation has fallen below target for six months. Lee also will comment on the expected inflation path and monetary policy measures to achieve the target, according to a BOK statement.
To contact the reporter on this story: Jiyeun Lee in Seoul at jlee1029@bloomberg.net. To contact the editors responsible for this story: Brett Miller at bmiller30@bloomberg.net, Peter Pae, Jodi Schneider
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