Consumer prices up 4.2 percent on-year in Dec.

Korea’s consumer prices grew over 4 percent for a second-straight month in December, raising concern that inflation could remain a drag on the nation’s economy, a government report showed yesterday.

According to the report by Statistics Korea, the Consumer Price Index rose 4.2 percent in December from a year earlier, matching its gain in November.

Core inflation, which excludes volatile oil and food costs, grew 3.6 percent from a year earlier, the largest hike for this year.

It gained 0.4 percent from the previous month.

For 2011, the nation’s consumer prices advanced 4 percent, meeting the top end of the government’s annual inflation target through 2012, the report showed.

However, the government is likely to face harsh public criticism as inflation calculated under the previous system stood at 4.4 percent last month.

The government revised the Consumer Price Index system by taking out gold prices while putting in telecommunication prices last month.

The new Consumer Price Index has a lower figure than the previous system, used since 2005.

Inflation exerts a negative influence on the economy as high prices can cause consumers to reel in their spending.

High crude oil, raw materials and food prices have all contributed to inflationary pressure here.

The government expects things will improve next year, predicting that consumer prices will grow 3.2 percent in 2012, down from this year’s annual target of within 4 percent.

The report showed that farm products and oil prices fueled inflationary pressure.

Fresh food prices, including vegetables and fruit, dropped 3.6 percent in December from a year earlier, but agricultural, fishery and livestock prices rose 5.8 percent over the same period.

High energy costs drove up manufactured product prices, which jumped 5.3 percent on-year in December.

Prices of gasoline and diesel fuel rose 9.6 percent and 14.1 percent, respectively.

Service-sector prices also grew 2.8 percent with home rental prices gaining 5 percent, the report showed.

Taming inflation is one of the top priorities for policymakers.

The Bank of Korea, the nation’s central bank, said on Thursday that its monetary policy goal next year will be aimed at stabilizing prices.

Earlier this month, Minister of Strategy and Finance Bahk Jae-wan said the nation is facing “tough” inflationary conditions as prices of farming goods and energy prices could continue to rise in winter.

Yonhap