South Korea's consumer prices grew sharply in February mainly due to soaring food and energy-related product costs, adding to concerns that mounting inflationary pressure could undercut the nation's economic recovery, a government report showed Wednesday.
According to the report by Statistics Korea, the country's consumer price index surged 4.5 percent last month from a year earlier. The figure is higher than the 4.1 percent spike in January, and it also stayed much higher than the government's 2011 inflation target of 3 percent.
From the previous month, consumer prices rose 0.8 percent. Excluding volatile oil and food costs, the country's core inflation prices grew 3.1 percent from a year earlier, up from 2.6 percent tallied for January, the report showed.
The latest inflation data comes after the government launched its "all-out" efforts to keep prices under control at the start of this year for fear that price instability could undercut its strong but still fragile economic recovery.
The government has unveiled diverse measures such as easing import taxes on basic goods, unloading its stockpiles of agricultural products and cracking down on price-rigging in the corporate sector that it fears could lead to a rise in consumer prices.
Soaring food and crude oil prices drove up the overall consumer prices.
According to the report, the fresh food price index jumped 25.5 percent in February from a year earlier, keeping its two-digit growth for nine straight months. The spike is driven mostly by rising prices of vegetables and fruits.
Prices of oil-related products jumped 12.8 percent from a year earlier, sending the costs of producing goods at factories higher, the report showed.
Oil remains a drag on the government's efforts to stabilize consumer prices as the turmoil in North African and Middle East countries has resulted in a spike in crude oil prices, a serious external factor especially for South Korea, which depends heavily on imports for its energy need.
In recent trading, crude oil prices topped US$100 per barrel, prompting the government to raise its energy alert level and take measures to lower import taxes for major raw materials as a way to ease price hikes in the domestic market.
The government worried that inflation could take the steam out of the nation's economic recovery at a time when it aims to achieve 5 percent growth for this year while stabilizing price hikes at about 3 percent.
The growth and inflation projections are based on the assumption that oil prices will remain at an average of $85 per barrel for this year, according to the government's report unveiled last December.
Experts are expressing concerns that those outlooks might have to be revised down as oil prices are rising at a faster-than-expected rate amid deepening political unrest in the Middle East.
Major private-sector think tanks recently said they might raise their oil price projections for this year in their upcoming report on economic conditions. That could lead to adjusting upward inflation outlooks and eventually result in lower growth forecasts for this year, they noted. (Yonhap News)