Roundup: S. Korea's headline inflation keeps zero level for 6 months

South Korea's headline inflation stayed at the zero percent level for six straight months, boosting concerns that the economy might have already slipped into deflation, statistical agency data showed on Tuesday.

Consumer prices gained 0.5 percent in May from a year earlier, according to Statistics Korea. The consumer price inflation stayed below 1 percent for six months since December last year.

After excluding the effect from tobacco price hikes, the inflation declined for the fourth consecutive month. From January this year, the tobacco prices were raised by a whopping 80 percent, lifting the consumer price inflation by 0.58 percentage points.

The negative growth adjusted for tobacco price hikes fueled worries about the South Korean economy falling into deflation already, but the Finance Ministry said that the low headline inflation stemmed mainly from low crude oil prices.

Excluding volatile farm goods and energy prices, the consumer prices kept a higher level than the headline figure.

Core consumer prices, which exclude volatile agricultural and oil products, gained 2.1 percent in May from a year earlier, staying above 2 percent for five months in a row.

The OECD-method core consumer prices excluding food and energy prices increased 2.2 percent on-year in May, staying above 2 percent for the fifth straight month.

The statistical agency said that lower oil product prices pulled down the headline inflation by 1 percentage point, noting that the low level of inflation was also attributable to cuts in city gas prices in January, March and May.

Oil-related product prices dropped 19.3 percent in May from a year earlier. City gas prices plunged 20.9 percent, leading to a 9 percent decline in prices for electricity, tap water and gas on a yearly basis.

Industrial goods prices slid 0.3 percent in May from a year earlier. Gasoline and diesel prices plunged 17.2 percent and 19.9 percent each, with LPG prices for car usage tumbling 25.3 percent.

Prices for agricultural, livestock and fishery products increased 2.7 percent in May on a yearly basis. Prices in napa cabbage and green onion surged 85.9 percent and 65.6 percent each on reduced crops.

Services prices increased 1.6 percent, lifting the overall headline inflation by 0.88 percentage points in May. Public services prices rose 0.5 percent, and private services prices gained 1.8 percent.

The so-called livelihood prices, which reflect daily necessities, slid 0.4 percent, but fresh food prices, which gauge fruits and vegetables, gained 3.2 percent, marking the first increase in 21 months. Endi