South Korea January inflation at 3.6%, near a decade-high

[SEOUL] South Korea's consumer inflation for January hovered near a decade-high on surging fuel and food prices, boosting the case for more interest rate hikes in 2022.

January consumer prices jumped 3.6 per cent from a year earlier, beating a 3.3 per cent gain tipped in a Reuters poll and remaining above the central bank's 2 per cent target for a 10th straight month.

Core inflation, which excludes volatile food and fuel costs, jumped 2.6 per cent from a year earlier, the fastest since December 2015, in a sign that surging prices of fuel and other raw materials have fed through to higher service costs for goods and services.

A sub-index on fresh food prices jumped 6 per cent year-on-year and one for agricultural and fisheries soared 6.3 per cent, government data showed on Friday (Feb 4).

Transportation costs gained 7.2 per cent year-on-year, boosted by rising prices of automotive fuel imports.

The strong reading, coming after a 3.8 per cent rise in November, is fanning views the Bank of Korea could raise interest rates again this year after its back-to-back hikes brought the benchmark interest rate to pre-pandemic levels of 1.25 per cent in January.

The minutes from the board's Jan 14 meeting showed a majority of its seven members were worried about price pressures building, which could hurt sentiment as Asia's fourth largest economy recovers from the Covid-19 epidemic. REUTERS