© . People in masks walk in Myeongdong shopping district as social distancing measures are put in place to prevent the spread of the coronavirus disease (COVID-19), in South Korea’s Seoul, Aug. 19, 2020. REUTERS/Heo Ran
By Joori Roh SEOUL () – Consumer inflation in South Korea fluctuated for nearly a decade in February, surpassing the central bank’s 2% target for the 11th month, putting pressure on policymakers to raise interest rates amid of rising oil prices as a result of the Russian Ukraine crisis. The consumer price index (CPI) for February was up 3.7% from a year earlier, government data showed on Friday, ahead of a 3.5% gain tipped in a survey and notched up a notch. decade high of 3.8% in November. In January it rose by 3.6%. The breakdown of the data showed that the cost of petroleum grew 19.4%, while those of rental housing and outdoor dining were up 2.1% and 6.2%, respectively, year over year. “Price instability is likely to continue with continued increases in energy prices and industrial goods,” said Park Sang-hyun, an economist at Hi Investment & Securities. “The future development of the crisis in Ukraine and its impact on oil prices will play an important role in inflation,” he said. Core inflation, excluding volatile food and energy costs, rose 2.9% year-on-year, the fastest since June 2009, a sign that rising fuel and other commodity prices have led to higher costs for goods and services. This is putting pressure on the Bank of Korea’s (BOK) monetary policy council to raise key interest rates further in the coming months, after successive rate hikes in November and January. The BOK kept the base rate at 1.25% at its February meeting. At the end of February, the BOK also sharply raised its inflation forecast for this year from 2.0% to 3.1%. It sees inflation for next year at 2.0%. Separately on Friday, Finance Minister Hong Nam-ki said the country will extend the 20% tax cut on oil products for three months to minimize the impact of rising energy prices, fueled by the crisis between Russia and Ukraine. “The Korean government cut fuel taxes last year to ease price pressures, but its impact was offset by a faster rise in oil prices. We believe the CPI would have been much higher without price controls,” said Park Chong-hoon. , said economist at Standard Chartered (OTC:) Bank Korea. Disclaimer: Fusion Media would like to remind you that the data on this website is not necessarily real-time or accurate. All CFDs (Stocks, Indices, Futures) and Forex prices are not provided by exchanges but rather by market makers, and therefore prices may not be accurate and may differ from the actual market price meaning prices are indicative and not suitable for trading purposes . Therefore, Fusion Media does not bear any responsibility for any trading losses that you may incur as a result of using this data. Fusion Media or anyone associated with Fusion Media accepts no liability for any loss or damage resulting from reliance on any information, including data, quotes, charts and buy/sell signals on this website. Be fully informed about the risks and costs associated with trading the financial markets, it is one of the riskiest forms of investment possible.