Inflation Pressure Abates

The Bank of Korea said Thursday that producer prices in May dropped under the April level due to the stronger won and slower demand.

The producer price index fell by 0.1 percent in May in the first monthly decline in the last 12 months. The index rose 3.4 percent for the year ending Thursday.

The central bank said the appreciation of the won in May led to lower won-denominated import prices, and lagging world demand also pushed down international price levels as well.

Prices in the service sector declined by 0.3 percent, suppressed largely by lower demand in the transportation industry and in leasing.

Manufacturing sector prices also declined by 0.2 percent from April because of lower energy and imported raw material prices. Agricultural and fisheries goods prices rose by 1.7 percent, or 3 percent when seasonally adjusted. Utility costs remained unchanged from the previous month.

The Ministry of Finance and Economy said consumer prices also remained stable in May. That index was unchanged from April to May.

Residential rents rose slightly, by 0.5 percent, while retail agricultural and fisheries prices fell by 0.6 percent, according to data from the National Statistical Office. Consumer prices of manufactured goods rose by 0.2 percent.

The consumer price index was 5.4 percent higher compared to last May, however.

The Finance Ministry's Welfare and Consumer Policy Bureau Director General Oh Kab-won said he expected the trend of stable prices to remain unchanged for some time.

by Song Sang-hoon