S. Korea's headline inflation stays below 1 pct for 7 months

Source: Xinhua| 2019-08-01 11:37:20|Editor: Yang Yi
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SEOUL, Aug. 1 (Xinhua) -- South Korea's headline inflation stayed below 1 percent for the seventh consecutive month to July, lowering burden for the central bank's more accommodative monetary policy, a government report showed Thursday.

The consumer price index stood at 104.56 in July, up 0.6 percent from a year earlier, according to Statistics Korea.

The consumer price inflation hovered below 1 percent for seven straight months since January, marking the longest zero-range inflation since 2015.

During the January-July period, the CPI gained 0.6 percent compared with the same period of last year. It was the lowest inflation in four years.

The low inflation reduced burden for the Bank of Korea (BOK)'s more accommodative monetary policy. The central bank cut its benchmark interest rate by 25 basis points last month to 1.50 percent.

The U.S. Federal Reserve cut its target rate by a quarter percentage point to a range of 2.00-2.25 percent overnight, marking the first rate cut in more than a decade.

Asked about the possibility for further rate cut, BOK Governor Lee Ju-yeol told reporters earlier in the day that the BOK would consider it if economic situations worsen much more.

Lee said the BOK paid attention to the Fed's indication of further rate cut to maintain the U.S. economy's expansion.

Inflationary pressure weakened mainly from the supply side amid the lower prices of farm goods and oil products.

Price for agricultural, livestock and fishery products slipped 0.3 percent in July from a year earlier, pulling down the overall headline inflation by 0.02 percentage points.

Vegetable price dipped 6.4 percent last month on favorable weather conditions, while prices for livestock and fishery products shed 2.7 percent and 0.2 percent respectively.

White radish price tumbled 27.5 percent, with those for sweet potato, garlic, onion and pork posting a double-digit decline last month.

Industrial product price was unchanged in July from a year ago, but oil product price diminished 5.9 percent, pulling down the overall inflation by 0.27 percentage points.

Services price rose 1 percent, lifting the inflation by 0.56 percentage points. Private services price gained 1.9 percent on higher dining-out costs.

Jeonse price made no change last month. It was the lowest increase in 13 and a half years since January 2006 when the Jeonse price inched down 0.1 percent.

Jeonse is the country's unique contract between two households where a landlord grants a residence right for two years to a tenant, who in turn lends a certain amount of money, or deposit, to the landlord.

The fresh food index, which reflects price for vegetable, fruit, fish and shellfish, declined 1.6 percent in July from a year earlier.

The so-called livelihood price index, which gauge costs for daily necessities, added 0.4 percent in July, staying below 1 percent for the seventh straight month.

The core price index, which excludes agricultural and oil products, gained 1.0 percent last month. The OECD-method core consumer price, which excludes volatile food and energy costs, added 0.9 percent in the month.