(2nd LD) Consumer price growth stays below 1 pct for 5th month

All News 11:20 June 04, 2019

(ATTN: UPDATES with details in lead, last 6 paras)

SEJONG, June 4 (Yonhap) -- South Korea's consumer price growth stayed below the 1 percent threshold for the fifth consecutive month in May due mainly to expanded social welfare schemes that helped rein in a rise in service charges and a decline in oil prices, government data showed Tuesday.

Consumer prices rose 0.7 percent in May from a year earlier, marking the lowest for any May since 2015, when the corresponding figure stood at 0.6 percent, according to Statistics Korea.

Kim Yun-sung, director at the agency's price statistics division, said increased welfare and free education, as well as the decline in prices of petroleum products are behind lower consumer prices.

Core inflation -- which excludes agricultural and petroleum products -- rose 0.8 percent from a year earlier. From a month earlier, the consumer price index rose 0.2 percent.

Prices of petroleum products fell 1.7 percent in May from a year earlier, while prices of agricultural, livestock and fishery products rose 1.2 percent in the same period, according to the data.

Utility prices rose 1.3 percent on-year last month, while prices of industrial goods edged up 0.3 percent, Statistics Korea said.

The agency also said prices of service charges increased 0.8 percent.

The data came amid growing calls for a rate cut in Asia's fourth-largest economy, although the Bank of Korea remains cautious about tweaking its monetary policy.

The central bank left its policy rate unchanged at 1.75 percent Friday for the sixth straight month amid lingering concerns over weaker economic growth, but one of its rate-setting board members cast a dissenting vote.

There are growing arguments for the BOK to cut the key rate as an escalating trade feud between the United States and China is hurting global demand for South Korean goods.

Seoul's outbound shipments have dipped for six consecutive months since December, with its exports to China slipping for seven consecutive months.

The U.S. and China are the world's two largest importers of South Korean products.

South Korea's economy contracted a revised 0.4 percent in the first quarter from three months earlier, marking the worst performance since the 2008-09 global financial crisis.