Roundup: S. Korea's headline inflation stays below 1 pct for 5 months

South Korea's consumer price inflation stayed below 1 percent for five months in a row, boosting worries that the economy may fall into deflation, a government report showed on Friday.

Consumer prices rose 0.4 percent in April from a year earlier, posting an identical figure with March, according to Statistics Korea. The April inflation was the lowest since July 1999 when consumer prices inched up 0.3 percent.

The headline inflation declined below 1 percent in December 2014, keeping a downward trend through April and bolstering concerns about the deflation risk.

The consumer price inflation registered a negative number for three straight months when excluding the effect of tobacco price hike. Average cigarette prices jumped a whopping 80 percent from this year, raising the inflation by 0.58 percentage points.

The low inflation was mainly attributable to lower oil prices, which plunged 20.9 percent in April from a year earlier, pulling down the overall inflation by 1.1 percentage points.

City gas prices tumbled 14 percent in April from a year earlier as the government lowered the prices to reflect the fall in production costs caused by cheaper oil. The prices for electricity, gas and tap water sank 5.9 percent in April due to the decline in city gas prices.

Core consumer prices, which exclude volatile agricultural and oil products, climbed 2 percent in April from a year earlier, staying above 2 percent for the fourth consecutive month.

The OECD-method core inflation, which excludes energy and food prices, was 2.3 percent last month on a yearly basis.

Despite growing worries about deflation risks, the Bank of Korea, the country's central bank, is expected to show a wait-and- see stance for the time being as the disinflation stemmed mainly from supply-side factors such as cheaper oil.

The central bank cut its policy rate to an all-time low of 1.75 percent in March after lowering it by 25 basis points each in August and October last year.

Prices for agricultural, livestock and fishery products declined 0.5 percent in April. Those for pork, rice and banana retreated 3.5 percent, 2.8 percent and 6.2 percent respectively.

Industrial goods prices, which reflect demand-side inflationary pressures, slid 0.5 percent in April from a year ago. Gasoline and diesel prices tumbled 19.5 percent and 21.7 percent each, leading the low headline inflation.

Services prices, which also represent demand-side inflationary pressures, increased 1.6 percent last month. Private services price advanced 1.9 percent on higher food prices in company cafeteria and higher tuition fees in private educational institutes for middle school students.

Public service prices gained 0.5 percent on higher outpatient medical costs and sewerage service charges.

The so-called livelihood prices, which reflect costs of key daily necessities, slid 0.7 percent in April from a year ago, and fresh food prices, which gauge fruits and vegetables, declined 0.9 percent. Endi