(LEAD) S. Korea's consumer prices rise 2.8 pct in Dec: gov't report

(ATTN: ADDS quotes, details from 4th para)
SEOUL, Dec. 31 (Yonhap) -- South Korea's consumer prices grew at the fastest pace
in eight months in December as prices of food, alcoholic beverage and clothes
increased, a government report showed Thursday.

According to the report by Statistics Korea, the consumer price index rose 2.8
percent this month from a year earlier, accelerating from a 2.4 percent on-year
advance the previous month. It was the fastest gain since April when prices
jumped 3.6 percent.
Core inflation, excluding volatile oil and food prices, rose 2.2 percent this
month from a year ago, the report showed. For the full 2009 year, prices advanced
2.8 percent, staying within the central bank's earlier target range of 2.5
percent and 3.5 percent, according to the report.
"Thanks to the overall decline in oil prices, we could meet the central bank's
annual inflation target this year," Yang Dong-hee, head of the price statistics
division at the agency, told a press conference. "Though, the December's figure
hits an eight-month high, it is mainly driven by seasonal factors such as a hike
in prices of agricultural and fishery products, which pushed up foodstuff costs."
Runaway inflation once served as a heavy drag on government-led efforts to
stimulate the slumping economy with consumer prices rising to a 10-year high in
July last year but prices have been stabilizing ever since.
Earlier, the nation's central bank became more flexible on inflation by
broadening its 2010-2012 target inflation range to between 2 percent and 4
percent from between 2.5 and 3.5 percent for the previous three years. The move
was intended to give more leeway for the bank to manage its monetary policy
flexibly and better cope with economic uncertainty.
The Seoul government predicts that South Korea's economy will manage to avoid
what many have feared the first contraction in more than a decade this year by
growing 0.2 percent before expanding 5 percent in 2010.
To achieve a sustained growth, however, the government has affirmed that it will
maintain its expansionary macroeconomic policy stance for the time being. The
central bank earlier kept its key interest rate at a record low of 2 percent for
a 10th consecutive month.
kokobj@yna.co.kr
(END)