South Korea Inflation January 2008

South Korea's inflation accelerated in January to its haighest level in more than three years as costs of industrial goods and fuel rose following a surge in crude oil prices. The consumer price index rose at an annual 3.9 percent rate, as compared with a 3.6 percent increase in December according to data released by the statistics office today. The increase was the largest since September 2004. month on month prices were up 0.5 percent in January from December.



Bank of Korea Governor Lee Seong Tae said recently that inflation is expected to accelerate even as the risk of a U.S. recession increases.


According to the central bank half yearly economic outloook released in December consumer price inflation is expected to accelerate to 3.3 percent in 2008 from 2.5 percent in 2007. The central bank aims to keep inflation between 2.5 percent to 3.5 percent target range.


The central bank's policy board members next meet on Feb. 13 to decide on interest rates. In January the bank kept the overnight call rate unchanged for a fifth month at a six-year high of 5 percent, after back-to-back increases in July and August.

Core consumer prices, which exclude oil and other volatile items, rose 0.6 percent from December, and core prices were up 2.8 percent from January 2007.

Industrial goods prices rose 0.7 percent from December, boosted by a 1.8 percent gain in oil product costs, while the cost of agricultural, dairy and fisheries goods rose 0.2 percent over the month.