South Korea’s consumer prices in March grew at the fastest pace in 14 months on rising fresh food and oil prices, adding further tightening pressure on monetary authorities even as the economy remains fragile amid ongoing Covid-19 crisis.
According to Statistics Korea on Friday, the country’s consumer price index (CPI) accelerated 1.5 percent from a year ago to 107.16 in March, marking the steepest rise since January 2020.
The CPI rise has stayed in zero territory from October to January, but accelerated to above 1 percent from February.
The sharp gain was mostly driven by a 13.7 percent on-year jump in agricultural, livestock and fishery product prices.
Prices of agricultural goods soared 19.2 percent, with prices of green onions surging 305.8 percent due to the poor harvest from long-stretched rainy season and frequent typhoon.
Livestock prices increased 10.2 percent and fishery products 1.8 percent.
Industrial goods prices went up 0.7 percent, marking the first rise since March 2020. The gain stemmed from a 1.3 percent hike in petroleum product prices on the back of the growing international crude prices.
Utility prices dropped 5 percent from a year earlier.
Prices of service gained 0.7 percent, mainly driven by the individual service price increase at 1.8 percent. Dining costs rose at the sharpest pace since September 2019 at 1.4 percent.
Public service prices fell 2.0 percent on the government’s free education policy.
Living necessaries price index rose 1.5 percent from the previous year, and fresh food price index jumped 16.5 percent.
Upward pressures strengthened by improved consumer sentiment, rising global oil prices and base effect from low inflation in April to May last year, said Eo Woon-sun, a senior official at Statistics Korea. But they could come down by stabilizing in fresh food prices and a potential delay in economic recovery amid the continued spread of Covid-19, she explained.
“Inflationary pressure is strengthening on the economic recovery and high inflation expectations, but consumer prices are not likely to grow sharply as there are both upside and downside factors,” said Eo.
Bond prices further slipped, with the yields on longer-dated rising faster on bets on higher rates. (Bond prices and yields move in the opposition direction).
The 10-year government bond yield rose 1.4 basis points to 2.037 and 20-year paper 1.6 basis points to 2,173. Even the three-year bond yielded 1.139 points by midday Friday, hardly unchanged from previous closing but slipping further away from the record-low policy rate of 0.50 percent.
The Ministry of Finance and Economy Friday said it will issue 50-year government bonds every month from April in efforts to balance out oversupply concerns.
For April, it will supply 14.5 trillion won ($12.86 billion) in new sovereign debt issues including 50-year bonds through competitive bidding.
By Choi Mira
[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]