Jun Ji-hye, a reporter at the finance desk of The Korea Times, focuses primarily on economic policy and government agencies, mainly covering the Ministry of Finance and Economy, the Ministry of Budget and Planning, the National Tax Service and the Korea Customs Service. She previously covered financial authorities, including the Financial Services Commission and the Financial Supervisory Service, and earlier worked on the political, city and business desks, reporting on a wide range of issues.
EXPLAINER How SKT data breach pushed inflation up by 0.6 percentage point
Customers wait at an SK Telecom store in central Seoul, April 29, 2025, two days after the company began offering free USIM replacements following a hacking incident that compromised subscribers’ information. Korea Times photo by Park Si-mon
By Jun Ji-hye
The fallout from SK Telecom's data breach last year has resurfaced in consumer inflation data a year later. In an unexpected twist, a 50 percent cut in mobile phone bills for more than 20 million subscribers at the time created a base effect that pushed up last month’s consumer inflation rate by nearly 0.6 percentage point, government data showed Wednesday.
According to the Ministry of Data and Statistics, the consumer price index stood at 120.05 in August, up 3.1 percent from a year earlier.
Inflation had accelerated from 2.6 percent in April to 3.1 percent in May and 3.2 percent in June before easing to 2.8 percent in July. It returned to the 3 percent range a month later.
At first glance, the latest data may suggest that inflationary pressures are picking up again. But the August increase was largely driven by the fading impact of SK Telecom’s massive mobile bill discounts introduced last year following the incident, which potentially affected approximately 25 million customers.
In August last year, the country’s largest wireless carrier cut mobile bills by 50 percent for all subscribers to prevent customers from switching to rival carriers following the incident. The temporary discount drove mobile phone charges down 21 percent from a year earlier.
But the effect was reversed a year later. As last year’s discount dropped out of the annual comparison, mobile phone charges surged 26.7 percent last month, adding significant upward pressure to overall consumer inflation.
“The fading impact of last year’s mobile bill discounts added about 0.58 percentage point to August’s inflation rate,” a ministry official said. “Excluding the base effect, consumer inflation would have stood at around 2.5 percent.”
That would have marked the lowest inflation rate since March, when consumer prices rose 2.2 percent from a year earlier.
Still, it would be difficult to attribute the entire rise in inflation to the base effect. Prices of processed food rose 1.5 percent last month, accelerating by 0.5 percentage point from the previous month.
The ministry said the increase reflected a string of recent price hikes for processed foods, including bread, snacks and noodles, that have been gradually passed on to consumers.
The living necessities index, which focuses on items that consumers purchase frequently and serves as a gauge of perceived inflation, also increased 3.2 percent.
Petroleum product prices, meanwhile, rose 14.2 percent in August, slowing from a 15.5 percent increase in the previous month. The government’s price cap on petroleum products is estimated to have lowered the overall inflation rate by 0.5 percentage point.
Authorities said price pressures have not disappeared, as petroleum prices continue to rise at a double-digit pace, while escalating tensions in the Middle East and extreme heat and other weather conditions could put further upward pressure on prices.
“Inflation is expected to slow in September compared with August as the base effect fades,” Lee Ji-ho, deputy governor of the Bank of Korea, said during a meeting on price trends. “But underlying inflationary pressures are expected to persist, particularly among core items.”