South Korea's producer price growth slowed down at a 16-month low rate in March due to a slight decrease in oil price growth and sluggish domestic demand, South Korea's central bank said on Thursday.

The producer price index, an indicator to help forecast future consumer inflation, logged an on-year growth of 3.5 percent in March, down from February's 4.4 percent on-year advance, according to the Bank of Korea (BOK).

The rise in the index marks the slowest growth since November 2007 when the index gained 3.1 percent annually.

Despite a weaker local currency, production price growth is likely to slow down as the growth of oil prices has eased from a year earlier, the BOK told local media.