South Korea consumer inflation accelerates in July
Monday, August 1, 2011
SEOUL, South Korea (AP) — South Korea's inflation rate accelerated for a second straight month in July as rising prices defy a series of central bank interest rate increases.
The country's consumer price index rose 4.7 percent last month from the year-before period amid higher costs for food and transportation, the government's Statistics Korea announced Monday. That followed an increase of 4.4 percent in June.
The result for July matched the 4.7 percent reached in March, which was the highest since 4.8 percent recorded in October of 2008.
South Korea, Asia's fourth-largest economy, is not the only country in the region battling rising prices.
Surging inflation is among the factors threatening East Asia's economic outlook, the Manila-based Asian Development Bank said in a report last week, emphasizing that levels in many economies have risen above 10-year averages.
Inflation in China, Asia's largest economy, rose to a three-year high of 6.4 percent in June.
The Bank of Korea has raised its key interest rate five times in the past year to 3.25 percent in a bid to stem price pressures, though it kept the borrowing cost unchanged in July.
South Korea's inflation rate has now been above 4 percent for seven straight months, a level the central bank sees as intolerable. The bank's next meeting to set the benchmark interest rate is scheduled for Aug. 11.
In June, the International Monetary Fund expressed concern about South Korean inflation and urged "further steady monetary tightening."
So-called core inflation, which strips out volatile agriculture and oil prices, also accelerated in July, increasing 3.8 percent from the year before, Statistics Korea said. It had risen 3.7 percent in June.
Compared with the previous month, the overall consumer price index rose 0.7 percent in July.
South Korea's latest inflation figures came after the central bank announced last week that the country's economic growth slowed in the second quarter to an expansion of 0.8 percent amid weaker exports, manufacturing and services.
The central bank last month raised its inflation forecast for this year to 4 percent from the previous figure of 3.9 percent. It also cut its forecast for economic growth to 4.3 percent from 4.5 percent.
The bank's inflation target is 3 percent, but it has set a "tolerance range" of plus or minus one percentage point from that level. The consumer price index has exceeded the upper end of that range — 4 percent — every month this year through July.