S. Korea`s consumer price growth slows to 5.1 pct in September

SEOUL, Oct. 1 (Yonhap) -- South Korea's consumer prices grew at a slower pace in
September than in the previous month as oil and commodity prices showed signs of
stabilization, a government report showed Wednesday.

The consumer price index jumped 5.1 percent last month from a year earlier,
decelerating from a 5.6 percent on-year advance in the previous month, according
to the National Statistical Office (NSO).
Lower inflation comes from a drop in prices of oil and other commodities. The
price of Dubai crude, South Korea's benchmark, had fallen nearly 40 percent since
mid-July.
Still, the September inflation figure breached the central bank's target range
for a 10th straight month. The Bank of Korea aims to keep the nation's inflation
rate under 3.5 percent until 2009.
"Inflationary pressures seemed to be easing since reaching a 10-year peak in
July, as oil prices drove down overall production costs," said Kim Yu-mi, an
economist at Eugene Investment & Securities. "Still, the descending value of the
local currency remains a major drag on consumer prices."
The fast sliding local currency is among major concerns for the Seoul government,
which put its top priority on taming inflation. A weaker won puts upward pressure
on inflation by making imports costlier.
On Tuesday, the won tumbled to a 64-month low of 1,207 won against the U.S.
dollar, down 18.2 won from the previous day's close. The won has been one of the
biggest decliners among Asia's currencies.
Analysts say that lower inflation might give more room for policymakers who may
consider lowering key interest rates to boost the nation's sluggish economy amid
spreading concerns over global financial instability. They will convene a meeting
next week to determine monetary policy direction.
The central bank left its key interest rate for September unchanged at 5.25
percent after raising it by a quarter of a percentage point in the previous month
to stem growing inflationary pressures.
In the second quarter, South Korea's economy, Asia's fourth-largest, expanded 4.8
percent on-year, the lowest since the first quarter of 2007.