South Korea's consumer prices grew at the slowest pace in nearly 14 years in May, indicating that inflation remains in a quite stable mode, a government report showed Monday.

The country's consumer prices index rose 1 percent on-year in May, slowing from a 1.2 percent on-year gain in the previous month, according to the report by Statistics Korea.

The figure was the slowest growth since September 1999 when it increased 0.8 percent on-year. It also represented the seventh straight month since November that the price growth has stayed in the 1-percent range.

However, the core inflation, which excludes volatile oil and food prices, advanced 1.6 percent on-year in May, quickening from a 1.4 percent rise in April, the report showed.

The so-called "livelihood price" index that measures the costs of key daily necessities inched up 0.2 percent on-year in May. The index has stayed below 1 percent for six straight months, the report showed.

Prices of fresh food, including fruits and vegetables, fell 1.9 percent last month from a year earlier, the first contraction in nine months. Factory product prices also inched down 0.1 percent on-year in May, with the prices of oil-related products dropping 7.4 percent.

The latest consumer price figures come as South Korea's economy is showing signs of losing steam as its exports and domestic demand growth remain weak in the face of heightened uncertainty at home and abroad.

The country's gross domestic product grew less than 1 percent for the past eight straight quarters. Last year, the economy expanded just 2 percent, the slowest growth in three years.

The slowing economic growth prompted the government to come up with a 17.3 trillion won (US$15.3 billion) extra budget, which received parliamentary endorsement last month. The central bank also lowered its key interest rate by a quarter percentage point to a two-year low of 2.5 percent earlier last month.

Experts worry that the slowing growth and prolonged decelerating price increases are indicating that deflation concerns are looming large.

"It appears that deflation is not far from us anymore," said Jeon Min-kyu, an economist at Korea Investment & Securities Co.

"Price growth will likely stay quite low for a relatively long period of time as far as domestic demand remains weak."

Jeon said that the country has almost always been faced with cost-push inflation since the early 2000s, but the government and the central bank have just focused on keeping prices under control by raising the key interest rate, which he thinks failed to deal with real problems and just hurt the already slumping domestic demand.

He said that the government's stimulus measures, including the extra budget, could be helpful to some extent, but it needs to do more than that to bolster the overall consumer and corporate spending significantly.

The government looks at things differently, saying that the slowing consumer price growth in May is in part due to stabilizing food and international crude oil costs compared with the same period of 2012, which helps remove some demand-side risks.

"It is premature to talk about deflation at this time, though inflation remains at quite low levels. We expect that consumer prices will likely stay this way throughout June, but they will likely bounce back from July," said Lee Dae-hi, the director of the finance ministry's inflation affairs division. (Yonhap News)