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Roundup: S.Korea's headline inflation stays above 1 pct amid higher food prices

Xinhua, April 1, 2016 Adjust font size:

South Korea's headline inflation managed to stay above 1 percent in March on the back of surging food prices, which may have led consumers to feel that prices are much higher than the official data showed, a government reported showed on Friday.

Consumer prices rose 1 percent in March from a year earlier, after gaining 1.3 percent the previous month, Statistics Korea data showed.

The official figure for consumer price inflation stayed below 1 percent for 11 months through October last year due to cheaper crude oil and lackluster domestic demand.

The headline inflation rose above 1 percent in November and December, but it fell again below the level in January at 0.8 percent.

Though the inflation managed to be higher than 1 percent in February and March, it remained far below the Bank of Korea (BOK)'s mid-term inflation target of 2 percent. The new target will be adopted for three years from 2016.

The official data could signal deflation risks at a glance, but consumers would have felt that living costs are getting expensive amid surging food prices.

Fresh food index, which gauges the prices of 51 volatile items of vegetable and fruit, jumped 9.7 percent in March from a year earlier. It was the same as the February figure, which posted the highest in 37 months.

Onion prices soared 99.1 percent, with those for Chinese cabbage, scallion, garlic and white radish jumping 86.5 percent, 49.8 percent, 47.1 percent and 35.9 percent respectively.

In March, farm goods prices tend to rise as major vegetables stop being harvested. In January this year, unexpected heavy snow and cold spell led to lower inventory of key crops.

The so-called livelihood price index, which measures prices of 142 key daily necessities, inched up 0.4 percent last month on a yearly basis.

Weighing down on living costs for households further, home rents increased at a fast pace. Record-low interest rates led homeowners to increase rents to offset lower interest income.

The BOK cut its benchmark interest rate by 25 basis points in March and June last year to an all-time low of 1.5 percent.

Public services prices gained fast, with intra-city bus fare, subway charge and sewage fee soaring 9.6 percent, 15.2 percent and 21.1 percent respectively.

Prices for agricultural, livestock and fishery products increased 5.4 percent, but industrial goods prices fell 0.9 percent to maintain a downward trend for three straight months.

Amid cheaper crude oil, gasoline and diesel prices tumbled 10.9 percent and 17.2 percent in March from a year ago. Passenger car prices went down, with prices for electricity, tap water and natural gas declining 8 percent.

Core inflation, which excludes volatile agricultural and oil products, rose 1.7 percent in March on a yearly basis. The OECD-method core inflation, which excludes food and energy costs, increased 1.9 percent last month. Enditem