SEOUL: South Korea’s inflation rate remained way below the central bank’s target range in May as low crude oil prices depressed consumer price gains, government data showed Tuesday.
Inflation stood at 0.5 percent from a year earlier, Statistics Korea said, adding to fears of deflation in Asia’s fourth-largest economy. The rate was marginally higher than the 0.4 percent recorded in April, which was the lowest level since 1999.
The finance ministry said consumer prices would pick up in the second half of this year due to a gradual increase in international oil prices. Inflation has remained far below the central bank’s target of 2.5-3.5 percent for nearly three years, averaging 1.3 percent in 2014.
Despite record-low interest rates, the Bank of Korea has predicted annual inflation will drop below the 1.0 percent mark in 2015, fuelling concerns of deflation that could hammer an overgrown property market. The exports that drive the country’s economy have fallen in every month this year, including May.
