Korea's consumer prices growth hits 16-month high in Dec.

South Korea's consumer prices grew at the fastest pace in 16 months in December, a government report showed Thursday, amid government-led efforts to stave off deflation concerns.

The country's consumer price index rose 1.3 percent this month from a year earlier, according to the report by Statistics Korea, marking the highest level since August 2014, when it hit 1.4 percent.

"As global oil prices experienced a relatively gentle fall this month, compared to a year ago, the December figure recorded a 16-month high," said Woo Young-jae, director at the statistics agency's Price Statistics Division. "A rise in prices of agricultural products, public utility charges and house bills also contributed to the on-year growth."

For the whole of 2015, the price index increased by a record low margin of 0.7 percent on-year, slightly lower than the 0.8 percent fall in 1999 in the aftermath of the 1998 Asian financial crisis.

"It's not a phenomenon that only South Korea faces, but also the entire world suffers from low inflation stemming from a super-low oil trend," Woo said.

The price of Dubai crude, which accounts for about 80 percent of South Korea's overall oil imports, has been on a steep decline due to oversupply concerns. Global oil prices hover around an 11-year low this month.

Core inflation, which excludes volatile oil and food prices, increased 2.4 percent on-year last month.

December marked the 12th straight month that core inflation grew by more than 2 percent on-year, the statistical office said.

In the service sector, prices gained 2.3 percent in December from the year before and rose 0.2 percent from a month earlier. The increase was attributed to the 2.9 percent jump in rent prices, as well as gains in both public and private service costs.

The statistical service said this month's "living necessities" price index, which measures the cost of key products that people consume on a daily basis, added 0.6 percent on-year on the back of rising food prices.

The Ministry of Strategy and Finance expected the price index to continue to show a modest gain next year on forecasts that the pace of low crude prices will slow down in the coming year, although a hike in cigarette prices will be excluded from the index next year, which added 0.58 percentage point to this year's figure.

The Seoul government raised the price of a pack of cigarettes by an average of 2,000 won ($1.70) in the beginning of the year.

"The price index will likely expand 1.5 percent next year on the back of the oil prices downturn slowing and recovering domestic demand," the ministry said. "The ministry will take steps to prop up domestic consumption in order to get out of such a low inflation trend and promote economic growth." (Yonhap)