South Korea’s producer prices increased at the slowest clip in 17 months in January on a sharp fall in prices of vegetables and fruits, the central bank said Thursday.

The producer price index, a barometer of future consumer inflation, gained 3.4 percent in January from one year ago, slowing down from 4.3 percent on-year growth in the previous month, according to the Bank of Korea (BOK).

Last month’s data, which was released ahead of the BOK’s monetary policy meeting to set the key interest rate, marked the slowest monthly growth since August 2010, when producer prices grew 3.1 percent on year.

Compared with the previous month, producer prices added 0.7 percent in January, with the growth rate ticking up from 0.2 percent monthly gain in December. Prices of vegetables and fruits gained in January from the previous month.

The slowdown in year-on-year growth in producer prices may assuage persisting concerns about inflation, which has become the top priority for President Lee Myung-bak’s administration and the central bank.

The BOK said on Tuesday that the outlook for consumer prices, South Korea’s benchmark inflation gauge, is still unstable due to inflation expectations from consumers and geopolitical risks brought on by U.S.-Iran tensions.

South Korea’s consumer prices, meanwhile, grew 3.4 percent in January, with the growth rate falling below the 4 percent ceiling of the BOK’s target range for the first time in three months.

Compared with the previous month, however, consumer prices continued to expand last month.

The central bank said on Tuesday that the cooling down of consumer prices in the first month of 2012 was due largely to the base effect from sharp price hikes one year ago. 

(Yonhap News)