Energy costs raise producer prices

Korea’s producer prices rose at the fastest pace in nine months in June, on higher electricity and gas costs and more expensive seafood and farm produce.
The index, which measures prices paid to producers, climbed 2.7 percent last month from a year earlier, the Bank of Korea said in a statement yesterday in Seoul. That was the biggest gain since September 2006, when the index jumped 3.1 percent.
Quickening producer-price inflation may add to expectations that the central bank will raise interest rates as evidence emerges economic growth is accelerating. Korea’s won is close to the strongest in seven months against the U.S. dollar and the yield on five-year bonds is near the highest since December 2005 on speculation the Bank of Korea may raise borrowing costs.
Governor Lee Seong-tae and his six fellow policy makers meet on Thursday to review rates. The central bank raised borrowing costs three times last year, taking the overnight call rate target to 4.5 percent to help curb price pressures.
Prices of agricultural, fisheries and livestock produce gained 7.1 percent from a year earlier compared with a 2.5 percent increase in May, yesterday’s report showed.
Bloomberg