South Korea's consumer price growth slowed to 2.5 percent in April due to the government's efforts to tame hikes in private service charges, a report showed Tuesday.
Consumer prices advanced 2.5 percent in April from a year earlier, down from a 2.6 percent on-year gain in the previous month, according to Statistics Korea. From a month before, the prices were unchanged.
The April figure was the lowest in 21 months and marked the two straight months that the headline inflation stayed at the 2 percent range. The consumer price inflation remained below the upper ceiling of the Bank of Korea (BOK)'s inflation target band of 2-4 percent in April for four straight months.
Core consumer prices, which exclude volatile agricultural and oil product prices, roe 1.8 percent on-year in April, down from a 1.9 percent on-year gain tallied in the previous month, while the OECD-method core CPI, excluding food and energy prices, rose 1.6 percent last month, down from a 1.7 percent a month before.
Despite high energy prices, a fall in price service charges contributed to slower consumer price growth, according to the report.
Service sector prices rose 1.3 percent in April from a year before. Public service prices gained 0.6 percent on-year in April, with private service charges advancing 0.7 percent over the same period.
Prices for using childcare facilities plunged 34.1 percent on- year in April, and prices for school meal tumbled 19.3 percent as the government widened its free school meal program. Preschool tuitions dropped 11.1 percent over the same period, and telecommunication fees retreated 6.4 percent as domestic wireless carriers lowered their service charges in a bid to meet the government's efforts to tame inflation.
Meanwhile, prices of manufactured products gained 3.8 percent on-year in April, down from a 4 percent rise tallied in the previous month. Petroleum product prices advanced 6.5 percent due to higher crude oil prices, but pharmaceutical product prices declined 3.6 percent last month.
Prices for agricultural, fishery and livestock products rose at a slower pace of 4.1 percent in April than the previous month as a fall in livestock product prices offset steady rise in agricultural product prices. Prices of livestock products sank 8.8 percent on-year last month, but agricultural product prices jumped 10.7 percent over the same period.
The fresh food price index, a gauge of fruits and vegetables, climbed 6.9 percent on-year in April. Fruit prices jumped 12.1 percent in April from a year earlier, but vegetable prices gained only 5.1 percent, with other fresh food prices dropping 15.1 percent.
Prices for electricity, water and gas advanced 5.8 percent on- year in April due to regional governments'hike in water prices.
Market watchers expected the headline inflation to stay at a low level for the rest of this year."Price cuts in apparel, home appliances and pharmaceutical products will continue to exert downward pressure on inflation for the rest of the year because producers will likely find it difficult to raise prices due to the weaker consumption outlook,"said Kwon Young-sun, an economist at Nomura International in Hong Kong.
On an on-month basis, food prices fell 0.4 percent last month, with those for apparel, home appliances and pharmaceutical products retreating 0.5 percent, 0.6 percent and 1.1 percent respectively. This outweighed a 1.5 percent gain in gasoline prices.
Kwon noted that slowing industrial output and declining exports hinted at weakening demand-side inflationary pressures, lowering its outlook for 2012 consumer price inflation to 2.5 percent from an earlier forecast of 2.7 percent. The economist added that the BOK would cut policy rates by 25 basis points both in August and October.
Output in the country's mining and manufacturing sectors expanded 0.3 percent on-year in March, sharply down from a 14.3 percent on-year growth in the previous month. Exports, which account for around half of the economy, contracted 4.7 percent on- year in April, posting its two consecutive months of decline./.