S. Korea`s consumer prices rise 3.9 pct in March

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SEOUL, April 1 (Yonhap) -- South Korea's consumer prices grew at a slower pace in
March than in the previous month as the cost of oil products declined, a
government report showed Wednesday.
According to the report by the National Statistical Office, the consumer price
index rose 3.9 percent last month from a year earlier, slowing from a 4.1 percent
on-year advance in the previous month. From February, consumer prices gained 0.7
percent.
Core inflation excluding volatile oil and food prices jumped 4.5 percent last
month, compared with the previous month's 5.2 percent rise, the report showed.
"Inflationary pressure seemed to ease as oil prices dropped and a fall in the
won-dollar exchange rate began to be reflected," said Ko Yoo-seun, an analyst at
Daewoo Securities. "Prices are expected to stabilize further."
Oil product prices plunged 8.2 percent last month from a year earlier, leading
the overall price drops, the report showed. The local currency is gaining ground
with the won's value rising around 10 percent in March alone. A stronger won
reduces overall import prices.
Higher inflation usually drives consumers to scale back spending, which would be
a burden on the government as it struggles to bolster domestic demand and revive
the slumping economy.
The government has unveiled a raft of stimulus measures, which include tax cuts
and increased fiscal spending. Last week, it endorsed a 28.9 trillion won extra
budget aimed at creating jobs and helping low-income people tide over a
protracted economic slump.
Finance Minister Yoon Jeung-hyun predicts the extra budget will add up to 1.5
percentage points in growth. He earlier predicted that the economy, Asia's
fourth-largest, would contract 2 percent this year, the first minus growth in
more than a decade.
Some experts cautiously express optimism that the economy is nearing a bottom,
citing indicators of a recovery.
On Monday, the central bank said that the nation's account surplus reached
US$3.68 billion in February, a turnaround from a $1.64 billion deficit the
previous month.
The trade surplus reached a record $4.6 billion in March, while the decline in
industrial output eased to 10.3 percent in February after a 25.5 percent drop in
the previous month, according to separate government data.
Financial markets seemed to be stabilizing, with the local currency and stock
markets gaining ground. The nation's stock benchmark KOSPI jumped to its highest
in more than a month last week and the won-dollar exchange rate fell below the
1,400 mark.
Hyun Oh-seok, the head of the state-run think tank Korea Development Institute,
said in a recent interview that the economy is currently "accumulating energy"
before staging a turnaround. He expected a rebound in the second half of this
year.
Analysts say that easing inflationary pressure might give more leeway for the
central bank in crafting monetary policies but they forecast a freeze in the
upcoming meeting held on April 9.
The Bank of Korea froze its key interest rate at a record low of 2 percent last
month after trimming the rate by 3.25 percentage points since October, saying it
has to leave room to brace for a deeper economic downturn.
kokobj@yna.co.kr
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