S Korea inflation surges

South Korea's consumer prices surged in July and the trade surplus hit a record high, official figures showed Monday, putting pressure on the central bank to raise interest rates to curb inflation.

The consumer price index rose by 4.7 per cent in July from a year earlier, Statistics Korea said, compared to a 4.4 per cent rise in June.

July's rise was the fastest since March, and marked the seventh straight month that inflation remained above the bank's target range of 2-4 per cent.

The price index rose by 0.7 per cent in July from the previous month compared with a 0.2 per cent monthly rise in June.

Core inflation, which strips out volatile energy and food prices, rose 3.8 per cent in July from a year earlier, the highest figure since a 3.9 per cent rise in May 2009.

The government has shifted its economic priority from growth to price stability, but has been hampered by continuing high energy costs and the effects of recent heavy rainfall.

'Judging from the pace of price hikes in recent months, the BOK's inflation forecast of 4.0 per cent for this year no longer stands,' SK Securities economist Yum Sang-Hoon told Dow Jones Newswires.

Source : New Age

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