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South Korea Producer-Price Inflation Eases to 31-Month Low

July 9 (Bloomberg) -- South Korean producer inflation moderated to a 31-month low as fresh fruit, vegetable and oil costs declined, highlighting the room for an interest-rate cut as central bank policy makers prepare to meet on July 12.

Prices rose 0.8 percent in June from a year earlier, the smallest gain since November 2009, after a 1.9 percent increase in May, the Bank of Korea said in a statement today. They fell 1.4 percent from the previous month.

Interest-rate cuts in China and Europe last week strengthened the case for a quarter-point reduction in Korean borrowing costs, according to ING Groep NV. That’s a minority view, with six out of seven economists in a Bloomberg News survey forecasting that policy makers will leave the benchmark unchanged at 3.25 percent.

Consumer inflation eased to a 32-month low of 2.2 percent in June and the Finance Ministry on June 28 cut its 2012 estimates for consumer prices and economic growth.

To contact the reporter on this story: Cynthia Kim in Seoul at ckim170@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net

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