S. Korea's producer price growth hits 16-month low in March

SEOUL, April 9 (Yonhap) -- South Korean producer prices grew at the slowest clip
in 16 months in March due to a retreat in oil prices and slumping domestic
demand, the central bank said Thursday.
The producer price index, a barometer of future consumer inflation, increased 3.5
percent in March from a year earlier, moderating from a 4.4 percent on-year
advance the previous month, according to the Bank of Korea (BOK). It marks the
slowest growth since a 3.1 percent annual gain in November 2007.
Annual growth in producer prices has been shrinking since hitting a 10-year high
in July last year on soaring oil costs, it added.
Meanwhile, the country's producer prices rose 0.5 percent on-month in March after
gaining 0.6 percent in February, it added.
"A weaker won puts upward pressure on inflation while the growth of oil prices
eased from a year earlier. It is fair to say that the producer prices will likely
grow at a slower annual pace in April," said Lee Byung-doo, an official at the
BOK.
The data comes after the BOK froze its key interest rate for the second straight
month at a record low of 2 percent earlier in the day.
The South Korean economy, Asia's fourth-largest, shrank 5.1 percent in the fourth
quarter of last year from three months earlier, the sharpest fall in more than a
decade, buffeted by tumbling exports and weak domestic demand. The economy is
widely expected to post negative growth in 2009, with the government predicting a
2 percent contraction.
sooyeon@yna.co.kr
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