(LEAD) Inflation expectations inch down for March despite worries over utility bills

(ATTN: ADDS BOK official's comments, photo)

SEOUL, March 29 (Yonhap) -- South Korea's inflation expectations inched down for March despite worries over rising public utility bills, a central bank survey showed Wednesday.

Ordinary people expected consumer prices to rise 3.9 percent for the year ahead, down 0.1 percentage point from what was surveyed a month earlier, according to the poll conducted by the Bank of Korea (BOK).

It followed two straight months of a rise.

"While price increases in processed food, dining out and transportation remain high, oil prices have recently fallen and overall consumer price index growth has slowed," a BOK official said.

"There is also news that inflation will fall further in the second half of the year due to a base effect, which has led to a modest decline (in inflation expectations)," the official added.

The downturn came despite worries that rising public utility and farming bills could add to upward pressure on consumer prices.

Of those surveyed, 81.1 percent cited utility bills as a major factor that could affect the path of inflation down the road, followed by farming and manufactured products with 31.5 percent and 23.6 percent, respectively, the poll showed.

The figures are closely watched, as their upward move could cause businesses to raise prices and people to ask for pay raises, thereby resulting in more upward pressure on inflation going forward.

In February, the country's consumer prices rose 4.8 percent on-year, slowing from a 5.2 percent increase tallied for the previous month.

Last month, the BOK froze its policy rate at 3.5 percent, standing pat on monetary tightening for the first time in about a year as concerns mount over an economic slowdown.

kokobj@yna.co.kr
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