Korea’s consumer prices grew at the slowest click in over 12 years last month amid government efforts to keep inflationary pressure down, a report showed Monday.

The country’s consumer price index rose 1.2 percent from a year earlier in August, compared with a 1.5 percent on-year gain the previous month, according to the report by Statistics Korea.

August’s reading marks the slowest gain since May 2000 when consumer prices rose 1.1 percent on-year. August also marks the second month in a row the country’s inflation stayed in the 1-percent range since moving there in July for the first time in three years.

The so-called core inflation, which excludes volatile oil and food prices, grew at 1.2 percent on-year.

“Free day-care and kindergarten services offered since March, along with a cut in college tuition earlier in the year, played a key role in the slowdown of overall prices. A drop in global oil prices in the second quarter also helped keep prices down,” said Lee Sang-jae, an analyst at Hyundai Securities Co.

The report showed prices of industrial goods gained 1.7 percent last month from a year earlier with agricultural, fisheries and livestock prices posting a 1.7 percent on-year drop. Prices of petroleum products rose 0.3 percent from the same period last year.

High oil prices had long been blamed for price increases here as the country depends on imports for most of its energy needs, which in turn, affect the costs of many factory products.

Rising farm products were earlier expected to put a heavy upward pressure on food prices amid concerns of poor harvests resulting from long droughts, but the overall food prices declined from a year earlier as livestock prices plunged 8.2 percent on-year with those of agricultural products gaining only 0.6 percent.

Market watchers said a slowing global economy may have also played a role in reducing the overall price hikes here by cutting down overseas demand.

The Ministry of Knowledge Economy earlier reported the country’s exports dropped 6.2 percent from a year earlier in August with its imports shrinking 9.8 percent on-year.

Analysts said the price stability will continue for some time, but it must not be taken for granted.

“Rising food prices will be reflected in the September figure especially with the Chuseok holiday coming with a rise in oil prices continuing to build upward pressure in the long run,” Lee said in a telephone interview.

“The basic tone of low price hikes will be maintained for some time, but the negative factors have not altogether disappeared, which means there still is a need for the government to try and keep prices down.” 

(Yonhap News)