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South Korea inflation sinks to near 16-year low

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South Korea's inflation rate dipped further in March to the lowest level in nearly 16 years as falling oil prices stoked deflationary fears, state data showed Wednesday.

[SEOUL] South Korea's inflation rate dipped further in March to the lowest level in nearly 16 years as falling oil prices stoked deflationary fears, state data showed Wednesday.

Consumer prices rose 0.4 per cent in March from a year earlier - compared to February's 0.5 per cent, state-run Statistics Korea said.

Both were the lowest rate since July 1999 when inflation stood at 0.3 per cent.

Core inflation, which excludes volatile oil and food prices, also decreased to 2.1 per cent, compared to 2.3 per cent in February.

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An extended slump in global oil prices has framed the downward inflationary trend in Asia's fourth-largest economy, where overall transport costs were down nearly 10 percent in March from a year earlier.

South Korea imports all of its energy needs from overseas.

Inflation has remained far below the Seoul central bank's target of 2.5 to 3.5 per cent for nearly three years.

It's descent below the 1.0-per cent mark last December has fuelled concerns of Japanese-style deflation.

The central Bank of Korea last month announced a surprise 25 basis point cut in the key interest rate in a move to fend off deflation and help boost sagging domestic demand.

The bank in January slashed its economic growth forecast for this year to 3.4 per cent from the previous 3.9 per cent, citing slowing demand at home.

AFP

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