Roundup: S. Korea's headline inflation keeps zero level for 7 months

South Korea's headline inflation kept a zero-percent level for seven months in a row, but farm goods prices surged on a long spell of drought, boosting worries about higher living costs, a government report showed Wednesday.

Consumer prices gained 0.7 percent in June from a year earlier, according to Statistics Korea. It was up from a 0.5 percent rise in May, but the figure stayed below 1 percent since December 2014.

The low headline inflation boosted worries about deflation risks, or falling consumer prices amid the economic downturn.

The South Korean economy was hit hard by the outbreak of Middle East Respiratory Syndrome (MERS) amid the lackluster exports, which declined for six straight months in June.

Consumers refrained from consumption and entertainment for contagion fears, but no case of MERS infection was reported for four days through Wednesday, indicating the possible end of the viral disease spread.

Excluding the effect of tobacco price hike, the consumer price inflation was in the front end of the zero percent. The hike in tobacco prices from this year had an effect of raising the headline inflation by 0.58 percentage points.

Core consumer prices, which exclude volatile agricultural and oil products, increased 2 percent in June on a yearly basis, staying above 2 percent for the sixth consecutive month.

The OECD-method core consumer prices, excluding energy and food prices, advanced 2.2 percent in June from a year ago.

Despite the low headline inflation, farm goods prices surged due to dry weather. Prices for agricultural, livestock and fishery products increased 4.1 percent in June from a year earlier.

Vegetable prices soared. Prices for green onion and napa cabage skyrocketed more than 90 percent, and those for white radish and oriental melon jumped 34.3 percent and 23.2 percent each. Garlic and red pepper powder prices increased 21 percent and 11.1 percent respectively.

The so-called livelihood prices, which reflect daily necessities, fell 0.1 percent, but fresh food prices, which gauge fruits and vegetables, jumped 6.1 percent in June, keeping an upward trend for the second consecutive month.

Industrial goods prices slid 0.1 percent on cheaper oil. Gasoline and diesel prices declined 14.9 percent each last month. TV prices also retreated 12.6 percent, helping pull down the price fall in industrial goods.

Services prices rose 1.6 percent in June from a year earlier, raising the overall inflation by 0.9 percentage points. Prices for public services gained 0.5 percent, with those for private services increasing 1.9 percent.

The finance ministry said in a separate statement that the consumer price inflation would rise further over time in the second half of this year, citing factors like higher crude oil prices and the expected economic recovery. Endi