SEOUL: South Korea’s inflation hit its lowest level in more than 15 years in February owing to slumping oil prices, state data showed on Tuesday, fuelling concerns about deflation in the country.
Consumer prices rose 0.5 percent in February from a year earlier—further slowing from January’s 0.8 percent, state-run Statistics Korea said.
February’s figure is the lowest since July 1999 when it rose 0.3 percent.
Core inflation, which excludes oil and food prices, came in at 2.3 percent, also slowing from January’s 2.4 percent.
Inflation has remained stubbornly below one percent for three consecutive months because of the slump in global oil prices, which have lost about 50 percent of their value since June. Asia’s fourth-largest economy imports nearly all of its energy needs from overseas.
Prices of petrochemical products dropped 24 percent year on year, while utilities service fees slid 2.5 percent.
Inflation has been stuck below the central Bank of Korea’s target range of 2.5-3.5 percent for almost three years and it now faces pressure to cut interest rates—already at more than four-year lows of 2.0 percent—to ward off deflation.
The bank in January slashed its economic growth forecast for this year to 3.4 percent from the previous 3.9 percent, while it lowered its inflation outlook to 1.9 percent from the 2.4 percent previously stated.