S. Koreas Consumer Prices Rose 4.7% in 2008

South Korea's consumer prices grew at a slower pace in December than in the previous month as falling crude oil prices drove down overall production costs, according to a government report Wednesday.

The consumer price index rose 4.1 percent this month from a year earlier, slowing down from a 4.5 percent advance the previous month, Yonhap News said quoting the National Statistical Office (NSO).

Eased inflationary pressure stemmed from a sharp drop in prices of oil and other commodities. The price of Dubai crude, South Korea's benchmark, has fallen more than $100 since surpassing $140 per barrel in mid-July.

The December inflation figure still breached the central bank's 2.5-3.5 percent target range for the 13th straight month. For 2008, consumer prices grew 4.7 percent, much higher than 2.5 percent a year earlier.

"With international crude prices declining at a fast clip, the overall cost of oil-related products is less here, easing inflationary pressure," the NSO said.

According to data provided by the NSO, gasoline and diesel prices plunged 17.7 percent and 7.4 percent in December from a year earlier. Core inflation excluding volatile oil and food prices stood at 5.6 percent for December.

High inflation drives consumers to scale back spending, which could make things worse for the local economy already struggling with slumping domestic consumption and exports.

Weak domestic demand is a major drag on the economy as debt-ridden households and businesses are tightening their purse strings for fear market conditions could worsen. Job markets remained stagnant, with the November jobless rate at 3.1 percent and job creation slumping to a 5-year low.