S.Korea Oct inflation slips to 14-yr low as food prices fall

31 Oct, 2013

SEOUL: South Korea's annual consumer inflation in October eased to its slowest rate in more than 14 years and further below the central bank's target, data showed on Friday, as prices of food products fell sharply.

The consumer price index rose 0.7 percent last month from a year earlier, Statistics Korea said in a statement, the slowest since July 1999 and weaker than the 1.0 percent rise forecast by a Reuters survey of analysts.

This was further below the Bank of Korea's target band between 2.5 percent and 3.5 percent, underscoring subdued economic activity though growth has picked up in recent weeks.

A finance ministry official attributed October's low inflation rate to unusually high prices for agricultural products a year earlier as well as a decline in prices for oil products, predicting that November's annual inflation will rise to 1 percent or higher.

Prices of agricultural, livestock and fisheries products fell 5.4 percent from a year earlier while prices of fresh foods dropped by an annual 11.1 percent, contributing to subdued price pressures for October. Price increases from the service sector and industrial goods also remained modest.

The central bank in October slashed its 2013 inflation forecast to 1.2 percent from 1.7 percent previously. The latest projection matches the average annual inflation rate for the first 10 months of this year. But annual core inflation, which strips out volatile food and fuel prices, stood at 1.6 percent, unchanged from October.

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