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S. Korea's consumer prices grow 1 pct on-year in June

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Published : 2013-07-01 09:55
Updated : 2013-07-01 09:55

South Korea's consumer price growth stayed in the 1-percent range for the eighth straight month in June, indicating that inflation remains in a quite stable mode, a government report showed Monday.

The country's consumer prices index rose 1 percent on-year in June, unchanged from the figure tallied in the previous month, which was the slowest growth since September 1999, according to the report by Statistics Korea.

The June figure represented the eighth straight month since November that the price growth has stayed in the 1 percent range.

The core inflation, which excludes volatile oil and food prices, increased 1.4 percent on-year in June, decelerating from a 1.6 percent gain in May, the report showed.

The so-called "livelihood price" index that measures the costs of key daily necessities inched up 0.3 percent on-year in June. The index has stayed below 1 percent for seven straight months, the report showed.

Prices of fresh food, including fruits and vegetables, dropped

2.2 percent last month from a year earlier, marking the second consecutive contraction. Factory product prices grew 0.4 percent on-year in June.

The consumer price figures come as South Korea's economy is showing signs of losing steam as its exports and domestic demand growth remain weak.

The country's gross domestic product grew less than 1 percent for the past eight straight quarters. Last year, the economy expanded just 2 percent, the slowest growth in three years.

The continued price declines led some market watchers to worry that deflation concerns are looming large over the South Korean economy.

The government dismissed such worries, saying that low consumer price growth in recent months are partly blamed on the "base effect" stemming from the relatively high prices of farming goods in the same period a year earlier.

The government added that consumer prices seem to have hit near bottom and are forecast to rebound starting in the second half.

"There should be a continued sharp price decline for a considerable period of time when you talk about deflation but the current state does not fit with that as prices stayed in the 1 percent range for just eight months," a ministry official said.

"Prices also seem to have hit a near bottom and are likely to bound back starting in the second half. The price growth will likely rise to the 2 percent range from next year," he added.

In its second-half economy management plan unveiled last week, the government predicted that the country's consumer prices will grow 1.7 percent for this year and the growth rate will rise to 2.8 percent next year. (Yonhap News)



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