South Korea October import price growth at 6-month high

Tuesday, 15 November 2011 10:37

SEOUL: South Korean import prices measured in won terms posted their highest annual growth in six months in October as the won's weakness aggravated rises in oil and some raw material prices, data showed on Tuesday.

The data underscored views that South Korea's consumer inflation will stay elevated for some time even as growth in Asia's fourth-largest economy cools in the face of softening demand from the United States and Europe.

Import prices measured in won value rose 16.0 percent in October from a year earlier, up from a 14.0 percent gain in September and the fastest advance since April this year, the Bank of Korea data showed.

"Import prices will definitely be putting (upward) pressure on consumer inflation in the coming months," said Yoon Yeo-sam, a fixed-income analyst at Daewoo Securities.

Prices of energy sources and minerals as crude oil, liquefied natural gas and iron ore jumped between 33 percent and 42 percent in October from a year earlier.

The won's average value per dollar fell 2.4 percent in October from a year earlier after gaining in September.

Export prices in won terms rose 9.2 percent in October from a year earlier, the strongest gain since April this year, the central bank data showed.

South Korean consumer price inflation in October eased more than expected to 3.9 percent year-on-year from 4.3 percent in September, coming within the central bank's 2 percent-4 percent target for the first time in 10 months.

The uncertain inflation outlook has kept analysts and investors split in forecasting the next direction of a Bank of Korea interest rate move, with many still expecting an additional raise in the policy interest rate.

On Friday, the Bank of Korea toned down its rhetoric on inflation in its monthly policy statement but stopped short of shifting its policy stance clearly to a loosening bias.