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.