South Korea is faced with growing inflationary pressure and expanded economic uncertainties stemming from worries over a global slowdown, the Finance Ministry said Tuesday.

“Our economy is confronted with fast accelerating inflation that stands in the 5 percent range with some latest indicators faltering,” the ministry said in its monthly economic assessment report.

“Economic uncertainties remain high with inflationary pressure standing high domestically, while downside risks for the global economy and volatility in financial markets increase.”

The assessment comes as South Korea has been gripped by rising inflation, fueled by higher oil and commodity prices in the international market.

Last month, the nation’s consumer price index, a major gauge of inflation, jumped 5.3 percent from a year earlier, the largest gain in three years. It has also exceeded the government’s annual inflation target of 4 percent for the eighth straight month.

The government is striving to tame inflation as prices could get higher ahead of the Chuseok holiday when demand for food usually spikes. This year’s Chuseok falls on Sept. 12.

Other key indicators added to concerns as they pointed to grim economic conditions for South Korea.

The country’s trade surplus shrunk sharply to $821 million in August from $6.31 billion tallied in July. Its industrial output also grew at the slowest pace in 10 months in July.

South Korea’s economy might face a tougher road ahead as the first-ever U.S. credit downgrade and the eurozone sovereign risks are raising concerns that the global economy may slide back into a recession.

“The government will strengthen its short-term and long-term policy response aimed at stabilizing prices, while closely monitoring economic trends at home and abroad,” the ministry said. 

(Yonhap News)