Import Prices Dip Most in 10 Years

South Korea's import prices declined by the largest margin in nearly 10 years in May due to pullbacks in oil prices and slumping demand, Yonhap News Agency reported, quoting the central bank.

Import prices in local currency terms tumbled 13.9 percent last month from a year earlier, compared with a 1.8 percent fall the previous month, according to the Bank of Korea (BOK). The May figure marked the steepest fall since June 1999 when such prices plunged 14.3 percent.

Compared with the previous month, import prices shed 3 percent in May after falling 7.8 percent month-on-month in April, it added.

"Although the Korean currency weakened against the dollar from a year earlier, the global economic slump and a sharp decline in oil prices pulled down import prices," Lim Su-young, an official at the BOK, was quoted as saying.

Raw material prices nose-dived 32.4 percent in May, after shedding 21.8 percent in April, it added.

Although oil prices have recently been on an upward trend, rising above $70 per barrel, they remain sharply lower than a year earlier. Oil prices peaked at $147 per barrel in July last year. South Korea, the world's fifth-largest crude buyer, relies entirely on imports for its oil needs.

The Korean won declined an average 17.6 percent against the U.S. dollar in May, compared with a year earlier.

Meanwhile, the country's export prices declined 4.1 percent from a year earlier, marking the first decline in 19 months and logging the steepest fall since February 2007.

On Thursday, the BOK froze its key interest rate at a record low of 2 percent for the fourth straight month, saying that a freefall in the local economy has halted. It made six consecutive rate cuts totaling 3.25 percentage points between October and February.