S. Korea's inflation to hit 4 pct this year: think tank

SEOUL, July 10 (Yonhap) -- South Korea's consumer inflation rate is likely to expand at a faster clip this year than expected earlier due to persistent inflationary pressure, a private think tank said Sunday.
In it economic outlook for the second half, LG Economic Research Institute said the country's consumer price index is expected to surge 4 percent on-year in 2011, up from an earlier estimate of 3.8 percent.
The think tank, affiliated with local conglomerate LG Group, also said Asia's fourth-largest economy will likely expand 4.1 percent in 2011 from a year earlier.
"The upward revision of the inflation rate is based on an assessment that public utility charges and growing house rental prices will continue to add fuel to inflationary pressure in the second half of the year," said the think tank.
But the growth rate of consumer prices is likely to lose steam in the July-December period, dropping to the upper 3-percent range from the 4 percent level recorded in the first half, it said.
South Korea's consumer price index surged 4.4 percent last month from a year earlier, quickening from the previous month's 4.1 percent gain.
June marks the sixth straight month that consumer prices have jumped above the government's renewed annual inflation target of 4 percent for this year.
The think tank said the recovery momentum of the South Korean economy is unlikely to be strong in the second half due to stubborn inflationary pressure, the local currency's strength against the U.S. dollar and other negative factors.
The think tank's growth projection is lower than the government estimate.
Late last month, the finance ministry estimated the economy would grow 4.5 percent for this year due to high energy prices and lingering global uncertainties, down from the 5 percent forecast made last December.
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