Consumer prices growth shy of 1 pct for 7th month in June

South Korea's consumer prices grew less than 1 percent for the seventh month in a row in June, a government report showed Wednesday, a worrisome pace of growth for a country trying to keep deflation at bay.
  

The country's consumer price index inched up 0.7 percent last month from a year earlier, the report by Statistics Korea showed.
  

Last month's number represents a modest gain from the 0.5 percent on-year growth tallied for May.
  

"Consumer inflation numbers are mainly being influenced by weak international crude oil prices," said Kim Bo-kyoung, head of the statistical agency's prices statistics division. "The lowering of utility prices such as gas, electricity and water further contributed to weak price gains."
  

Oil prices plunged 17 percent on-year in June, while gas, electricity and water charges fell 9 percent. On the other hand, agrofisheries prices advanced 4.1 percent last month, up from 2.7 percent reported for May.
  

"The agrofisheries sector increase is due to the drought, which affected output and costs," the official said.
  

The agency said that for last month, the country's consumer prices were in positive territory even if the 2,000 won ($1.78) increase in cigarette prices, which boosted inflation numbers this year, is excluded.
  

The country's core inflation, which excludes volatile oil and food prices, increased 2 percent on-year, down slightly from 2.1 percent on-year growth from the previous month. June marked the sixth straight month that core inflation grew more than 2 percent on-year.
  

The statistical office claimed that the core inflation rate exceeding the 2 percent mark is a sign that people are spending.
  

The cost of services gained 1.6 percent in June from the year before and was unchanged vis-a-vis May. The steady numbers come amid a rise in rent costs, as well as gains in private and public service fees.
  

The report, however, showed that the "living necessities" price index, which measures the cost of key products that people consume on a daily basis, again contracted 0.1 percent on-year.
  

This marks the sixth time that the index has fallen into negative territory since the statistical agency started compiling such figures in 1995. Growth numbers have been falling generally since August 2014. Living necessity prices have been on the minus side from January onward.
 

The finance ministry said supply-side factors such as low crude oil prices again curbed consumer price gains in June.
  

Despite weak prices, the country's expected inflation rate released by the Bank of Korea stood at 2.5 percent in June, unchanged from April and May. This rate is a barometer of future inflation as predicted by economic factors.
  

"Crude oil prices have been rising steadily and with the likelihood of the economy regaining some of its lost momentum, consumer prices should rise in the second half of this year," it said.
  

The ministry then said it is keeping close tabs on education, rent, medical and communication-related market prices that have a direct impact on people's everyday lives. (Yonhap)