S. Korea inflation surges to 5.3%
2011-09-01 16:08:43
South Korea's inflation hit a three-year high of 5.3 percent in August as fresh food costs surged, despite government efforts to curb rising prices, data showed Thursday.
The rise in the consumer price index (CPI) announced by Statistics Korea was the highest since a 5.6 percent year-on-year increase in August 2008. It compares to a 4.7 percent rise in July.
It was the eighth consecutive month that inflation has breached the central bank's target range for this year of 2-4 percent.
Month-on-month the CPI rose 0.9 percent in August compared with a 0.7 percent increase in July.
Core inflation, which omits volatile energy and food prices, rose by 4.0 percent in August from a year earlier and 0.3 percent from the previous month.
The finance ministry has made the fight against inflation its top policy priority. But higher food prices due to heavy summer rain and rising global energy and commodities prices have hampered its efforts.
"The higher-than-expected price hike in August is attributed to one-off factors such as surging prices for farm products and gold," said senior ministry official Yoon Jong-Won.
"We expect that it will go down to around 4 percent after the (September 11-13) Chuseok holiday as the prices of vegetables and fruit are likely to stabilise and the recent oil price fall will also be reflected."
South Korea also reported a sharp fall in its trade surplus in August from the previous month, due to summer holidays and weak technology-related exports to developed countries.
The surplus fell to $821 million last month from a surplus of $6.31 billion in July, the Ministry of Knowledge Economy said. Exports rose 27.1 percent year-on-year to $46.38 billion with imports increasing 29.2 percent to a monthly record of $45.56 billion.
The prolonged slowdown in the United States and Europe is complicating decisions on whether to raise interest rates to curb inflation.
"It's unlikely for the central bank to act immediately, but it may be forced to raise rates again once the global macroeconomic conditions stabilise," Mirae Asset Securities analyst Park Hee-Chan told Dow Jones Newswires.
The bank may announce one more 25-basis-point rise in the fourth quarter, Park said.
The central bank in August kept its key interest rate unchanged at 3.25 percent for the second straight month as uncertainties over the global economy overwhelmed inflation woes.