South Korea's May producer prices fall at slowest pace in 5 months

[SEOUL] South Korea's producer prices fell for a 10th straight month in May but at their slowest pace in five months, central bank data showed on Friday, in line with the bank's forecasts that the inflation rate will creep up in the second half of the year.

The producer price index in May fell 3.5 per cent from a year earlier, extending a falling streak that started in August last year, but the pace slowed slightly from a 3.6 per cent fall in April, the Bank of Korea said.

On an annual basis, all the sub-indices rose last month with the exception of industrial products and electricity, gas and water. Industrial product prices have the heaviest weighting on the scale, and they fell 5.8 per cent from a year ago, dragged down by coal and oil products.

For agricultural goods, producer prices gained 6.6 per cent last month in annual terms. That was the fastest rise since September 2012, fuelled by an ongoing drought that has sparked worries over crops.

Bank of Korea Governor Lee Ju-yeol said this week that the economy will not fall into deflation, and that the inflation rate will pick to the 1 per cent range towards year-end.

REUTERS