S. Korea's producer price growth hits 1-year low in Jan.

SEOUL, Feb. 9 (Yonhap) -- South Korean producer prices grew at the slowest pace
in a year in January due to falls in oil prices and slumping demand, the central
bank said Monday, giving further room for the bank to cut its policy rate.
The producer price index, a barometer of future consumer inflation, increased 4.7
percent in January from a year earlier, slowing from a 5.6 percent on-year gain
the previous month, according to the Bank of Korea (BOK). It marks the slowest
growth since a 4.2 percent annual gain in January 2008.
Growth in producer prices has been on a downward trend for six straight months
since hitting a 10-year high in July last year on soaring oil costs, it added.
The data came three days before the BOK holds its monthly rate-setting meeting.
Since October, the BOK has slashed its key interest rate by a combined 2.75
percentage points to a record low of 2.5 percent in a bid to prop up the sharply
slowing economy.
The South Korean economy, Asia's fourth-largest, shrank 5.6 percent last quarter
from three months earlier, the sharpest fall since the Asian financial crisis a
decade ago, due to tumbling exports and weak domestic demand.
Many experts predict the economy will slow sharply this year, with the
International Monetary Fund forecasting a 4 percent contraction in 2009.
South Korea's consumer prices grew 3.7 percent on-year in January, marking an
11-month low. But prices still breached the BOK's target range of 2.5-3.5 percent
for the 14th straight month.
sooyeon@yna.co.kr
(END)