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March inflation up 1.3% after 3 months of decline

Consumer prices rose 1.3 percent in March compared to a year earlier for the first increase in four months, largely due to more expensive cattle products and higher spending on services, the Ministry of Strategy and Finance said yesterday.

According to data released by Statistics Korea, it was the highest year-on-year growth since August.

Prices had been falling since a 1.2 percent increase in November.

The increased spending on services includes higher expenditures on child care and education because government subsidies for child care adopted in 2012 no longer have a tempering effect on inflation. From 2012 through last year, the government expanded its free child care, which helped contain consumer price growth.

In the second half of last year, the Bank of Korea and many private experts expressed concern about possible deflationary pressures as consumer prices maintained growth of less than 1 percent, far below the central bank’s inflation target of 2.9 percent.

Meanwhile, core inflation, a long-term index for price growth that excludes agricultural and petrochemical products, climbed 2.1 percent last month from a year earlier, the highest growth rate since February 2012.

Due to seasonal conditions, cattle prices went up 3.3 percent, while fisheries inched up 0.3 percent, although total agricultural product prices declined 2.1 percent.

Pork prices soared more than 10 percent, while chicken prices, in part due to the impact of avian flu, rose more than 3 percent.

BY song su-hyun [ssh@joongang.co.kr]