Roundup: S.Korea's headline inflation hits 8-month high on rising farm goods prices

Consumer prices in South Korea posted the highest increase in eight months as vegetable prices picked up during the kimchi-preparing period for winter, a government report showed on Tuesday.

Consumer prices gained 1.3 percent in October from a year earlier, the highest since February, according to Statistics Korea.

After staying below 1 percent for four months through August, the consumer price inflation rebounded above the 1 percent level in September and continued its upward trend in October.

Prices for agricultural, livestock and fishery products surged 8.1 percent over the year, raising the overall headline inflation by 0.60 percentage points. The reading lingered high after jumping 10.2 percent in September.

Agricultural product prices surged over 10 percent, with those for livestock and fishery products advancing 6.1 percent and 5.3 percent respectively.

Vegetable prices gained ground on poor crops caused by sweltering heat in summer. Prices for napa cabbage and white radish more than doubled as the period of preparing kimchi for winter came in.

Fresh vegetable prices surged over 40 percent, with fresh fruit prices rising 1.4 percent. The fresh food price index, which reflects vegetables, fruits and fish, advanced 15.4 percent.

Core consumer prices, which exclude volatile agricultural and oil products, rose 1.5 percent in October on a yearly basis. The OECD-method core prices, excluding food and energy costs, added 1.6 percent.

Food and non-alcoholic beverage jumped 5 percent, raising the overall consumer price inflation by 0.69 percentage points last month.

The so-called livelihood prices, which reflect daily necessities, gained 1.0 percent, marking the fastest increase since July 2014. It was attributable to higher farm goods prices and the weaker effect from the government's cut in electricity charges.

Electricity charges posted a double-digit fall in September as the government decreased electric bill rates, but the effect reduced last month, with the electricity costs falling at a single-digit rate.

Petroleum product prices shed 5.7 percent this month, but the falling pace was slower than a 7 percent decline in the previous month on the relatively stable crude oil prices.

Costs for district heating and city natural gas registered a double-digit fall, with prices for snacks and rice falling over 10 percent. Prices for gasoline and diesel dipped 5.6 percent and 3.8 percent respectively.

Higher headline inflation is expected to put more pressure on the Bank of Korea (BOK) to lift its policy rate that was lowered in June to an all-time low of 1.25 percent.

The U.S. Federal Reserve is widely forecast to raise interest rates later this year, disposing South Korea to risks of foreign fund outflow to seek a high-return investment.

Household debts in South Korea kept a record-breaking trend amid the record-low interest rate, pressuring the BOK which had refrained from altering its policy rate since June. Enditem