Producer price growth sinks to 10-month low

South Korea’s producer prices grew at the slowest clip in 10 months in October as crude oil prices posted more modest gains, which helped offset the local currency’s depreciation to the dollar, the central bank said Thursday.

The producer price index, a barometer of future consumer inflation, rose 5.6 percent in October from a year earlier, down slightly from a 5.7 percent on-year gain in September, according to the Bank of Korea.

Last month’s data marked the slowest growth since the 5.3 percent gain tallied in December 2010, it added.

Producer prices stayed flat in October, compared with the previous month, mainly because of a sharp fall in vegetable prices and a decline in commodity prices.

Prices of Dubai crude, South Korea’s benchmark, grew 29 percent on-year in October, slowing from a 40 percent gain tallied in the previous month.

In October, the local currency fell 2.77 percent to the dollar compared with a year earlier. A weaker won makes prices of import goods expensive, putting upward pressure on inflation.

The data came a day before BOK policymakers are to hold their monthly rate-setting meeting. The BOK is widely expected to freeze the key interest rate at 3.25 percent for the fifth straight month on the eurozone debt crisis.

Last month, consumer prices grew 3.9 percent from the previous year, slowing from a 4.3 percent on-year gain tallied in September.

Consumer inflation stayed below the upper limit of the BOK’s 2-4 percent inflation target band for the first time this year.
 

(Yonhap News)