South Korea’s consumer prices grew at a slower pace in March than a month earlier amid the government’s push to tame inflationary pressure, a report showed Monday.

According to the report by Statistics Korea, the country’s consumer price index rose 2.6 percent in March from a year earlier, slowing from a 3.1 percent gain in February. The index lost 0.1 percent compared to a month ago. 

Last month’s reading is the lowest in 20 months and marks the first time since August 2010 that inflation stood in the 2 percent range.

The so-called core inflation, which excludes volatile oil and food costs, grew 1.9 percent from a year earlier, which also decelerated from a 2.5 percent increase for the previous month. The reading marks the first time in a year that the core inflation numbers fell to 1 percent levels.

“The modest price gain tallied for last month can be attributed to the sharp drop in service charges as the state increased support for childcare and offered free lunches to school children,” the statistical office said.

Service charges that include outlays for using childcare facilities dropped a contracted 4.7 percent on-year, and 6.1 percent from the month before. Childcare service charges posted minus growth of 33.9 percent vis-a-vis February.

The statistical agency also said overall household spending on food fell 0.6 percent from the previous month as public schools expanded free lunch programs.

The latest report showed prices for telecommunication and recreation each falling 3.4 percent and 0.2 percent on-year, which helped offset 5.4 percent gains in public utilities charges that moved up because of higher energy prices.

Transportation and fresh agricultural products costs rose 4.6 percent and 4.9 percent, respectively.

Related to last month’s consumer price tally, assistant finance minister Joo Hyung-hwan said that retailers and gas stations contributed to the slowing gains by keeping down prices of processed food, fuel products and durable goods. He added that regional administrations’ efforts to keep public charges down helped with inflationary control.

“Despite improvements, the government is committed to controlling inflationary pressure by revamping local distribution networks, lowering prices of goods that can benefit from free trade agreements and implementing tariff quotas on certain products whose prices could go up in the coming months,” the official said.

The government has been pushing to tame inflation, which was driven mostly by rising crude oil, raw material and higher fresh agricultural prices. Last year, the nation’s consumer prices jumped 4 percent from a year earlier, hitting the upper ceiling of the Bank of Korea’s 2-4 percent target band. For this year, Seoul expects consumer prices to go up 3.2 percent.

Inflation exerts negative influence on the economy since high prices can cause consumers to be reluctant to spend. High crude oil, raw materials and farm prices have all contributed to inflationary pressure here.

Officials, meanwhile, stressed that high international crude oil prices that can exert negative influence across the board must be monitored carefully.

They said that once the parliamentary race is concluded there is a chance that fuel prices and public service charges may go up to reflect the recent rise in commodity prices. 

(Yonhap News)