[SEOUL] South Korea's consumer prices rose at their fastest pace in more than a decade in March, fuelled by rising energy and commodity costs due to the Ukraine crisis and adding pressure on the central bank ahead of its rate decision meeting next week.

The consumer price index (CPI) for March rose 4.1 per cent from a year earlier, Statistics Korea data showed on Tuesday (Apr 5), the fastest increase since December 2011 and outpacing a 3.8 per cent rise tipped in a Reuters poll.

Core inflation, which excludes volatile food and energy costs, also jumped 2.9 per cent from a year earlier, staying at the rate seen in February, in a sign that surging fuel and raw materials prices have fed through to costs for goods and services.

The breakdown of data showed the cost of petroleum surged 31.2 per cent, while that of housing rentals and outdoor dining increased 2 per cent and 6.6 per cent, respectively, on year. The cost of electricity, gas and water added 2.9 per cent.

That puts the Bank of Korea's (BOK) monetary policy board under pressure to raise the base rate further. It has hiked rates a total 75 basis points since the pandemic.

On Monday, BOK senior deputy governor Lee Seung-heon said this month's policy review will be challenging, due to the twin risks of higher inflation and downward pressure on growth.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

BOK board members meet on Apr 14. The bank's current base rate stands at 1.25 per cent, after policymakers stood pat at the last meeting in February following back-to-back hikes.

Last week, the BOK governor nominee Rhee Chang-yong told reporters that he sees inflation during the first half of 2022 outpacing the bank's 3.1 per cent forecast.

Separately on Tuesday, the government said it will expand tax cuts on oil products by 30 per cent, from the current 20 per cent, for 3 months to minimise the impact of soaring energy prices due to the Russia-Ukraine conflict. REUTERS