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South Korea Dec inflation inches down to 1.3% as utility costs fall

[SEOUL] South Korea's annual inflation in December inched down to the lowest since September this year because of a change in utility prices, data showed on Friday.

The consumer price index rose 1.3 per cent in December from a year ago, down from 1.5 per cent on revised terms, Statistics Korea said. The December index matched the 1.3 per cent increase projected in a Reuters survey.

The base year for the gauge was updated to 2015 from 2010 as of December this year and revisions for the prior figures are made accordingly.

From a month earlier, the index rose 0.1 per cent, slightly below the poll's forecast of a 0.2 per cent gain.

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The sub-indices showed costs for electricity, gas and tap water dropped 11.5 per cent on-year in December, the sharpest drop since September this year, due to changes in residential electricity tariffs.

This drop was partly offset by inflation from agricultural, livestock and fisheries products, which stood at 6.7 per cent in December on-year, reflecting rapidly rising egg prices sparked by an outbreak of avian influenza the government has been struggling to contain for over a month.

"Inflation stands a chance of acclerating in January due to the bird flu outbreak, as well as rising import prices," said Hong Chun-Uk, economist at Kiwoom Securities.

Inflation at 1.3 per cent still lags the Bank of Korea's target of 2 per cent, but the central bank sees inflation approaching the target next year as oil prices rise and the global economy recovers.

Core CPI, which excludes oil and agricultural products, rose 1.2 per cent from a year ago, slowing from 1.6 per cent in November and marking the lowest since Dec 2012 when it gained 1.1 per cent.

For the whole of 2016, inflation stood at one per cent, in line with forecasts from the government and central bank and accelerating from 0.7 per cent in 2015.