The Korea Herald


Consumer prices grow 4.2% in April

By 황장진

Published : May 2, 2011 - 11:37

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Korea's consumer prices grew at a slower pace in April, but they still remained relatively high, raising concerns price hikes might undercut the overall momentum of the economic recovery, a report showed Monday.

According to the report by Statistics Korea, the country's consumer price index jumped 4.2 percent last month from a year earlier. It was slower than the previous month's 4.7 percent gain but marked the fourth consecutive month that the price growth has been above the 4 percent mark.

From the previous month, consumer prices remained unchanged.

Excluding volatile oil and food costs, core inflation prices grew 3.2 percent from a year earlier, down from 3.3 percent tallied for March, the report showed.

Fresh food prices jumped 7.7 percent from a year earlier, leading the overall price growth last month. Prices of manufactured products also contributed to the hike by rising 5.7 percent, driven by rising import costs for crude oil.

Korea's consumer prices are closely watched as concerns over inflation are deepening among policymakers and experts fearing that fast price hikes could undercut the nation's economic growth momentum going forward.

Higher crude oil and commodity prices exert upward pressure on inflation here, as the nation depends heavily on the imports of such materials for domestic need. In March, consumer prices spiked 4.7 percent, the steepest growth in 29 months.

The government recently forecast that the consumer price growth might not fall below the 4 percent mark until the end of the first half.

Mounting inflationary pressure prompted the Bank of Korea (BOK) to raise its key interest rate in March by a quarter percentage point to 3 percent. This was the fourth rate hike since July last year from a record low of 2 percent.

Though it froze the key interest rate last month, observers expect that the BOK might raise the borrowing cost several more times this year in line with its stepped-up efforts to ease mounting inflationary pressure. The bank will hold a rate-setting meeting on May 13.

The high inflation figure comes as Korea's economy remains on a solid recovery track. Its industrial output rose 8.7 percent in March, the 21st straight month of on-year expansion.

The government forecast that the economy will grow 5 percent this year with inflation to be stabilized at around 3 percent.

Experts, however, express caution, saying that it could be tough to achieve both targets given the current situations at home and abroad. (Yonhap News)