South Korea Producer-Price Inflation of 0.3% Shows Rate-Cut Room

South Korea’s producer prices returned to inflation in August after a dip into deflation in the previous month.

Prices rose 0.3 percent from a year earlier, after a 0.1 percent decline in July, the Bank of Korea said in a statement today. The gain was 0.7 percent from the previous month.

Producer-price inflation has moderated this year from levels as high as 7 percent during 2011, highlighting room for cutting benchmark interest rates to support growth. Twelve economists in a Bloomberg News survey all forecast that the Bank of Korea will make a reduction at its next meeting on Sept. 13.

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