Higher commodity costs feared to fuel inflation

International prices of key raw materials have been rebounding recently, data showed Wednesday, raising concerns South Korea could face growing inflationary pressure due to its heavy dependence on their imports.

According to the data by the Korea Center for International Finance, the CRB index, a major gauge of raw material prices, came to 318.57 as of Monday, up 8.6 percent from Oct. 4 when it fell to 293.28, the lowest this year.

The increase is driven mostly by price hikes of key raw materials such as corn, beans and crude oil, experts said.

Crude oil prices, in particular, have been rising fast, with Dubai crude, South Korea’s benchmark, trading at $104.10 per barrel as of Monday. It was up 0.54 percent from the previous day and the hike is also in line with its recent upward move following a 14 percent fall over the past month.

“Global raw material prices are fluctuating in response even to a small factor in the market as worldwide uncertainties still remain in place,” said a researcher at the center.

The rising crude prices are inevitably driving up the cost of gasoline and other oil products here as South Korea imports almost all its crude oil for its domestic energy needs.

Korea National Oil Corp. said that gasoline prices at the pump averaged 1,980.73 won ($1.75) per liter during the third week of October, up from 1,935.3 won tallied during the first week of September.

Oil price increases, along with hikes in costs of buying other key commodities, are likely to exert upward inflationary pressure as South Korea struggles to keep prices under control. 

According to a government report, South Korea’s consumer prices jumped 4.3 percent last month from a year earlier, slowing from the 5.3 percent on-year gain in August.

The September figure still marked the ninth straight month that the consumer price hike has surpassed the government’s annual inflation target of 4 percent for this year. 

(Yonhap News)