June 6 (Bloomberg) -- South Korea's President Lee Myung Bak said the economy faces difficulties from rising oil and food costs and vowed to pursue policies to ease the burden on consumers.

``Our conditions are very difficult. International oil prices doubled in the last year and grain and raw-material costs are surging,'' Lee said in a speech delivered today in Seoul. ``Rising prices and a slowdown in the economy are putting our economy in a difficult situation.''

Rising commodity prices have cooled spending by consumers and businesses as they increase households' living costs and erode corporate profit margins. Inflation accelerated to a seven-year high of 4.9 percent in May and the economy grew at the slowest pace in more than a year in the first quarter.

The finance ministry said yesterday there are clearer signs the economy is in a ``downturn'' as domestic demand weakens and prices climb because of surging oil costs.

``I am confident that we will be able to overcome the current difficulties soon if the government and people work together,'' he said today. ``Reducing the agony of ordinary people is a priority when conducting government policy.''

South Korea's consumer-price inflation is likely to remain in the 4 percent range in June, the ministry said yesterday. The price of Dubai crude oil, South Korea's benchmark, surged 78 percent in the past year. The nation is the world's fifth- largest oil importer.

To contact the reporter for this story: Seyoon Kim in Seoul at skim7@bloomberg.net

Last Updated: June 5, 2008 23:42 EDT