S. Korea’s Consumer Prices Grow at Slowest Pace in 15 Years in 2014

Seoul, December 31 (QNA) – South Korea’s consumer prices grew at the slowest pace in over a year in December mainly due to a drop in oil and agricultural prices, as the country grapples to overcome deflation worries, a government report showed Wednesday.

The country’s consumer price index edged up just 0.8 percent last month from a year earlier, slowing from November’s 1 percent gain, according to the report by Statistics Korea. This marked the lowest increase since October 2013, when the consumer price index rose 0.9 percent on-year.

From a month earlier, the price index remained flat after numbers contracted for three straight months, according to South Korea’s News Agency (Yonhap).

The core inflation, which excludes volatile oil and food prices, rose 1.6 percent on-year, and inched up 0.1 percent from November. The gain marks the lowest increase since August 2013, when it moved up 1.5 percent, the report showed.

For the whole of 2014, consumer prices rose 1.3 percent, the same as the year before, with core inflation numbers gaining 2 percent.

Compared to the year before, oil prices plunged 11.4 percent, with prices for farm and industrial goods falling 4.1 percent and 0.6 percent, respectively.

From a month earlier, oil prices were down 3.9 percent.

On the other hand, meat and fish prices gained 8 percent and 4.5 percent vis-a-vis the year before, with utilities moving up 2.1 percent.

The cost of services gained 1.6 percent on-year and 0.1 percent from the month before in December.

The latest price data raised concerns that the country may be entering a long-drawn-out period of deflation that can adversely affect the country’s growth, despite the government claiming that consumer prices will advance 2 percent on-year in 2015.

To cope with deflation concerns and boost growth, economic policymakers have stressed an expansionary spending policy coupled with efforts to boost household income will be maintained until people can actually feel a positive change in their everyday lives.

Another move that can help push up consumer prices in the new year is the decision to hike cigarette prices. Lawmakers agreed to raise the price of a pack of cigarettes by an average of 2,000 won (US$1.80) in January, in a move the government estimated could add 0.62 percentage point to consumer prices in 2015. (QNA)

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