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Korea's consumer prices rise 4.4% in June

Korea's consumer prices rose at a faster pace in June, raising concerns that inflationary pressure is mounting despite the government's price stability efforts, a report showed Friday.

According to the report by Statistics Korea, the country's consumer price index rose 4.4 percent last month from a year earlier, quickening from the previous month's 4.1 percent gain.

The figure represents the sixth straight month that consumer prices have jumped over the government's renewed annual inflation target of 4 percent for this year.

Excluding volatile oil and food costs, core inflation rose 3.7 percent from a year earlier, marking the highest growth since May 2009 when it jumped 3.9 percent. It was also up from 3.5 percent tallied for May, the report showed.

"Grains, fruits, pork, processed goods, oil and dining-out costs all increased from a year earlier, contributing to the price hike last month," said Yang Dong-hee, head of the agency's price statistics division.

Korea has been gripped by rising inflation, fueled by higher oil and commodity prices in the international markets.

Against this backdrop, the government earlier this year announced its "war" against inflation.

But the nation seems to be losing the battle as consumer prices remain stubbornly high.

On Thursday, the government hiked its 2011 inflation target from 3 percent to 4 percent, while lowering growth outlook from 5 percent to 4.5 percent.

Finance Minister Bahk Jae-wan told reporters that the downward revision of economic growth can be understood as "our strong will to bring inflation down," apparently referring to its changed policy stance that focuses more on inflation than growth.

Inflationary pressure, however, might go up further in the second half as the government is poised to raise much-delayed public service fees, including those for electricity, transportation and other necessities closely related to people's daily lives.

The accelerating price hike might be turning up demand for the nation's central bank to raise its key interest rates.

On June 10, the Bank of Korea (BOK) hiked its key interest rate by a quarter percentage point to 3.25 percent to induce price stability. It will hold a rate-setting meeting on July 14.

The high inflation figure comes as Korea's economic recovery still remains on track, boosted by strong exports.

The nation's industrial output, a major gauge of overall economic activity, rose 8.3 percent in May from a year earlier, quickening from 6.9 percent growth in April.

This marked the 23rd straight month that production has expanded, raising hopes the nation's economic recovery will continue to gain momentum. (Yonhap News)

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