Korea Consumer Prices Rise 2% From Year Earlier on Storms
South Korea’s inflation accelerated the most in three months in September after typhoons damaged crops and a holiday boosted demand for food, according to a report nine days before the central bank decides interest rates.
Consumer prices increased 2 percent from a year earlier after a 1.2 percent gain in August, Statistics Korea said today in Gwacheon, south of Seoul. The median estimate in a Bloomberg News survey of 12 economists was for a 1.8 percent gain. Prices rose 0.7 percent from August.
The Bank of Korea will decide on Oct. 11 whether to cut interest rates for the second time this year to counter growth risks posed by Europe’s debt crisis and a slowdown in China. South Korea’s exports fell for a third month in September and industrial production dropped more than expected in August.
“The economy saw higher food prices due to two storms” and shopping ahead of the Thanksgiving holiday, or Chuseok, said Wai Ho Leong, a Singapore-based economist at Barclays Plc. “Growth is the overriding concern and we expect the central bank to cut by 25 basis points on Oct. 11.”
An index measuring prices of fresh foods rose 8.6 percent in September from a year ago, while public utility costs increased 5.9 percent, according to today’s statement. Core consumer prices, which exclude oil and agricultural products, advanced 1.4 percent from a year earlier.
The won weakened 0.2 percent to 1,113.25 per dollar at 9:00 a.m. in Seoul, according to data compiled by Bloomberg. The Kospi stock index rose 0.1 percent.
The International Monetary Fund on Sept. 21 reduced its 2012 growth forecast for South Korea to 3 percent from a June estimate of 3.25 percent. At the same time, the IMF said Asia’s fourth-largest economy has “sufficient policy space” to respond to downside risks.
The finance ministry announced 5.9 trillion won ($5.3 billion) of spending and tax relief last month to boost growth, adding to 8.5 trillion won of support measures in June. South Korea has been hit by storms this summer including typhoon Sanba last month, which forced tens of thousands of people to evacuate. Typhoons Bolaven and Tembin struck in August.
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