SEJONG -- South Korea's consumer prices fell 0.3 percent on-year in May due mainly to a fall in oil prices and the coronavirus pandemic, marking the first annual decline in eight months, data showed Tuesday.

The May tally compares with a 0.1 percent on-year gain in March, according to the data released by Statistics Korea.

The nation's inflation fell 0.2 percent on-month, the data showed.

Core inflation, which excludes agricultural and petroleum products, rose 0.5 percent from a year earlier.

Utility prices fell 0.7 percent on-year last month, while prices of agricultural, livestock and fisheries products climbed 3.4 percent on-year in May, the data showed.

It was the second time that the annual inflation rate fell below zero since the statistics agency began releasing the data in 1965. The country's inflation slipped 0.4 percent on-year in September last year.

Ahn Hyung-joon, a senior official at Statistics Korea, told reporters that the decline in the May inflation rate was mainly attributed to a plunge in oil prices.

Social distancing rules have also weighed on prices in the service sector, Ahn said.

In May, prices of petroleum products plunged 18.7 percent on-year, the data showed. Prices of livestock products rose 7.2 percent from a year earlier, and prices of processed foodstuffs rose 1.3 percent.

Automobile prices, on the other hand, slipped 2.2 percent on a government tax break aimed at promoting consumption.

Vice Finance Minister Kim Yong-beom said downside risks to inflation are growing as economic activities have contracted due to social distancing and weaker consumption.

Consumer prices could vary depending on how the nation's economy responds to the pandemic, Kim said.

The government will spare no efforts to prevent lower inflation from deterring investment and consumption, Kim said.

South Korea's consumer prices had increased at less than 1 percent for 12 consecutive months before growing 1.5 percent in January, followed by a 1.1 percent increase the following month

Slowing inflation may give the Bank of Korea (BOK) more room to ease its monetary policy.

Last week, the BOK slashed its policy rate by a quarter percentage point to a record low of 0.5 percent as the nation's economy is expected to grow at the slowest pace in over two decades amid the pandemic.

The rate cut came a little over two months after the BOK cut the base rate to 0.75 percent from 1.25 percent in its first emergency rate cut since October 2008. (Yonhap)