"However, demand-pull inflationary pressure is also building
up, driven by the overall economic recovery trend," he said, adding
that things remain "quite tough" as the nation has to tackle price
hikes caused from both supply and demand sides.

   He said it is the government's task to prevent the recent price
hikes from resulting in increasing inflation expectations and
eventually causing structural inflation for the nation's economy.

   His remarks come a day before the Bank of Korea (BOK) is to
hold a rate-setting meeting. Some analysts expect that the BOK will
raise the benchmark seven-day repo rate to 3 percent in a bid to
stem rising inflation. In February, the central bank kept the rate
unchanged at 2.75 percent.

   The government is struggling to prevent growing inflationary
pressure from putting a crimp on the economic recovery, as it could
dampen consumer spending. It aims to achieve a 5 percent economic
growth while stabilizing inflation at around 3 percent this year.

   Soaring oil, food and commodity prices are, however, driving up
inflation in South Korea. The nation's consumer prices jumped 4.5
percent in February from a year earlier, marking the steepest hike
in 27 months.

   Meanwhile, Yoon said the government has to step up monitoring
of the financial market amid increasing market uncertainty.

   "As concerns are growing over inflation along with the unrest
unfolding in the Middle East, capital inflow (to South Korea) is
slowing down, increasing volatility in the financial market," Yoon
said. "It is still unclear whether the slowing down is due to a
global rebalancing of money moving from emerging countries to
advanced ones."

   The minister, however, assured that capital will continue to
flow into South Korea considering its strong economic fundamental
but noted that the government will have to step up its monitoring
to better cushion any market fluctuations. (Yonhap News)