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(2nd LD) Consumer price growth hits over 1 pct in Feb.

All News 09:50 March 03, 2016

(ATTN: ADDS finance ministry's comments in last 3 paras)

SEJONG, March 3 (Yonhap) -- South Korea's consumer prices grew by more than 1 percent in February for the first time in two months on a rise in prices of public services and agricultural products, government data showed Thursday.

The country's consumer price index rose 1.3 percent last month from a year earlier, accelerating from January's 0.8 percent on-year gain, according to the report by Statistics Korea.

The figure had remained below the 1 percent level for 11 straight months until October last year but hit 1 percent in November and 1.3 percent in December.

Core inflation, which excludes volatile oil and food prices, increased 2 percent compared with last year, up 0.1 percentage point from a year ago.

Prices of agricultural products jumped 5.6 percent last month from a year earlier contributing to the overall rise in consumer prices gain as February's cold weather and the Lunar New Year's holiday pushed up prices of crops, fish and meat, said Statistics Korea.

In particular, prices of fresh food including vegetables and fruits jumped 9.7 percent last month from a year earlier.

"The cold weather and snow dampened fresh food production like agricultural products and fisheries. And demand for those products rose before the Lunar New Year holiday," said Woo Young-jae, director of the price statistics division at the statistical bureau.

Heavy snow continued in the country's farming regions including Gangwon Province in early February, while Lunar New Year's Day fell on Feb. 8, with five straight days of holiday from Feb. 6 to Feb. 10.

The service sector, including public bills, advanced 2.4 percent on-year last month to contribute to the uptick in the entire price index.

Prices of petroleum products, however, fell 8 percent on-year to drag down the entire price index by 0.32 percentage points last month, offsetting the sharp rise in agricultural goods and service bills, amid a global low oil price trend.

The finance ministry said downward pressure on consumer prices such as falling oil prices will likely ease in the coming months.

"The consumer price index will face relieved downside risks in the future on a slight turnaround in oil prices," the finance ministry said in a release, citing a market forecast that crude oil prices would gradually rise in 2016 to reach $40 in the fourth quarter.

"The government will do its best to stabilize the rising agricultural prices in the spring season of March and April."


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