By Na Jeong-ju
Staff Reporter
Prices of raw materials jumped 52.4 percent in March from a year ago, marking the sharpest annual growth in more than 10 years, the central bank said Thursday.
The data will put the Bank of Korea (BOK) in a more difficult position to cut its base interest rate. The bank earlier hinted at a rate cut in a bid to spur a economic growth momentum despite deepening concerns about inflation.
Raw material costs have risen sharply amid rising international prices of crude oil, metals and crops, causing sharp rises in consumer prices and denting private spending here.
The March figure is the steepest rise since January 1998, when prices jumped 57.6 percent, compared with a 45.1 percent gain in January and a 45 percent growth in February.
The price index for raw materials and intermediate goods, an indicator of consumer prices in months to come, jumped 23.1 percent in March from a year earlier. It was the fastest increase since July 1998, when commodity prices jumped 24 percent.
``Commodity prices shot up last month due mainly to soaring oil prices and a weaker won,'' said Yoon Jae-hoon, a BOK official.
The price of Dubai crude, Korea's benchmark, jumped 64.4 percent in March, compared with a year earlier.
The won's overall weakness against the dollar is also putting upward pressure on inflation as it makes imports more expensive. The local currency has fallen 5.4 percent against the greenback so far this year.
Consumer prices rose 3.9 percent in March, accelerating from a 3.6 percent gain the previous month and remaining above the central bank's target range of 2.5 to 3.5 percent for the fourth consecutive month.
The BOK has retained a hawkish monetary stance since last August, saying growing inflation risks outweigh concerns of a slowdown. However, BOK Governor Lee Seong-tae indicated last month that the bank may shift its policy focus to downside risks of inflation.
Consumers have become more pessimistic about the outlook for their economic conditions due to surging raw material prices, a U.S. economic slowdown and other external negatives.
Last week, the National Statistical Office said the index measuring consumer confidence and living conditions for the next six months dropped to 99.7 in March from 103.1 the previous month, falling below the benchmark 100 for the first time since March last year.