Korea's consumer prices grow more than 4% for first time in 10 years

South Korea's consumer prices grew more than 4 percent for the first time in more than 10 years in March as energy prices jumped amid Russia's invasion of Ukraine, data showed Tuesday.

Consumer prices rose 4.1 percent last month from a year earlier, accelerating from a 3.7 percent year-on-year gain in February, according to the data compiled by Statistics Korea.

Consumer inflation exceeded 4 percent for the first time since December 2011, when consumer prices climbed 4.2 percent.

Inflation topped 4 percent after consumer prices grew more than 3 percent for the fifth straight month in February. Its growth stayed above 2 percent ― the central bank's inflation target over the medium term ― for the 12th straight month in March.

Inflation pressure has built up due to the extension of the economic recovery momentum and oil prices surging on supply concerns over Russia's war with Ukraine.

The statistics agency said most of last month's price gains were driven by a hike in prices of petroleum products.

"There are concerns that price pressure could further rise due to the Ukraine crisis. For the time being, the possibility that inflation growth will sharply slow is not high," Eo Woon-sun, a senior Statistics Korea official, told reporters.

Dubai crude, South Korea's benchmark, soared to $101.84 per barrel Monday, sharply up from $77.12 at the end of last year. It hit a yearly high of $127.86 per barrel March 9. South Korea depends mainly on imports for its energy needs.

The government decided to cut fuel taxes by a record 30 percent from the current 20 percent starting in May for three months in a bid to ease people's burden from energy costs.

Last month, the country decided to extend a 20 percent cut in fuel taxes by three months until the end of July. The cut was set to expire at the end of April.

Core inflation, which excludes volatile food and oil prices, advanced 2.9 percent year-on-year last month.

Another gauge of core inflation, which excludes prices of agricultural and petroleum products, gained 3.3 percent, the fastest climb since December 2011.

Prices of petroleum products jumped 31.2 percent year-on-year in March, accelerating from a 19.4 percent rise in February, due to surging energy costs.

Services costs gained 3.1 percent as economic activity increased amid the vaccine rollout and the economic recovery. The price of dining out rose 6.6 percent, the fastest jump since April 1998.

Prices of daily necessities ― 141 items closely related to people's daily lives, such as food, clothing and housing ― climbed 5 percent.

Prices of agricultural, livestock and fisheries products rose 0.4 percent, slowing from a 1.6 percent increase in February.

In February, the BOK froze the benchmark interest rate at 1.25 percent after hiking it three times by a combined 0.75 percentage points since August last year. The BOK is widely expected to further raise borrowing costs in the coming months to tame inflation. (Yonhap)