S. Korean consumer prices fall 0.2 pct in June

Consumer prices in South Korea fell in June from a month earlier as a decline in prices of agricultural and industrial goods offset a rise in those of housing and services, a government report showed Monday.

Consumer prices in Asia's fourth-largest economy slipped 0.2 percent in June from the previous month, compared with a 0.2 percent monthly gain in May, according to the report by the National Statistical Office (NSO).

In annual terms, consumer prices rose 2.6 percent in June, slightly higher than a 2.4 percent annual rise the previous month, the office said.

The yearly gain in June was lower than a median forecast of 2.8 percent in a poll by Yonhap Infomax, the financial news arm of Yonhap News Agency.

"There are still inflation-stoking factors such as high oil prices and a rise in the cost of raw materials, but consumer prices will be kept at a low level for the year," said Han Sung-hui, assistant director of the NSO's price statistics bureau.

Core consumer prices, which exclude volatile food and energy costs, were 0.2 percent higher in June, compared with a 0.3 percent monthly rise the previous month.

In annualized terms, they increased 2.2 percent in June, decelerating from a 2 percent annual rise in May, the agency said.

The inflation rate is expected to remain steady, below 3 percent for the time being, as a firmer won versus the U.S. dollar helps offset a rise in oil prices and a sharp pickup in domestic consumption is likely to be limited to some degree, the office said.

The South Korean government wants to keep annual inflation below 3 percent.

The Bank of Korea, the country's central bank, raised its key interest rate by a quarter of one percentage point to 4.25 percent last month, in an apparent move to keep an economic rebound from sparking inflationary pressure.

The economy, which expanded 4 percent last year, is expected to grow 5 percent in 2006 on the back of improving domestic consumption and resilient overseas demand.

According to the agency, industrial product prices fell 0.2 percent in June from May, while costs of fisheries and agricultural goods were down 1.2 percent.

Housing rents rose 0.1 percent in June from May, while costs for individual services were also up 0.1 percent, the report showed.

Seoul, July 3 (Yonhap News)