The inflation index of utility bills for households -- including electricity and gas -- spiked by more than 30 percent in the first three months of 2023, marking the highest on-year increase since the 1998 financial crisis.

The increase in utility prices for electricity, gas and other fuels converted into the inflation index logged 135.49 points in the first quarter of 2023, up 30.5 percent from the same period last year, according to the Korea Statistical Information Service on Monday.

This marks the highest on-year inflation of the energy prices index in the first quarter that Korea has seen since the financial crisis in 1998, when the index experienced a 41.2 percent on-year surge.

The utility prices index for the first quarter showed a 5.5 percent on-year surge in 2022 and a minus 5.8 percent on-year drop in 2021.

In particular, the index for electricity prices stood at 136.48 points, showing a 29.5 percent on-year surge, the largest on-year jump since relevant data was first compiled in 1975.

The gas index stood at 129 points, rising by 36.2 percent. The index of kerosene, which is mainly used by people who live in houses that cannot supply gas, rose by 23.6 percent to 171.14 points from a year ago.

The surge in utility prices are thought to be the aftereffect of the hike in global energy prices sparked by Russia’s invasion of Ukraine in 2022.

Though the Korean government raised the electricity and gas rates four times from 2022 to the first quarter of 2023 -- pulling up the rates for electricity by 9.3 won ($0.0071) per kilowatt-hour and gas for 5.47 won per megajoule -- to respond to the hike in global energy prices, the raises were small over concerns of steep inflation, making state-run energy companies Korea Electric Power Corp. and Korea Gas Corp. suffer deficits.

For second quarter utility rates, the government further raised the rates by 5.3 percent on May 16 to ease the financial burden of the cash-strapped companies. The latest hike, which came more than a month later than it was supposed to, raises the electricity and gas rates by 8 won per kilowatt-hour and 1.04 won per megajoule, respectively.

Further hikes in utility bills are expected throughout the year as the recent increases are not enough to normalize the running of the energy companies.

The hike in utility prices is expected to lead to upward pressure on inflation.

The latest hikes in utility charges are expected to lead to a monthly increase of 7,400 won for a four-person household that uses an average amount of electricity and gas. This is expected to bring a 0.1 percentage point increase for the consumer price index this year.

Korea’s inflation has been on the wane since reaching its peak in July 2022, with the consumer price index rising by 3.7 percent on-year in April. The figure has been coming down slowly since reaching its peak at 6.3 percent in July 2023.

Yet, the figure still remains far above the Bank of Korea’s target set at 2 percent and it could rebound from the ongoing hike in utility charges.

The central bank, known to consider controlling inflation as its foremost agenda, is to hold a rate-setting meeting on Thursday. It is expected to make a decision on the key rate in consideration of unwavering inflation and a slow economy. The current base rate stands at 3.5 percent.