by Yoo Seungki
SEOUL, Sept. 3 (Xinhua) -- South Korea's consumer price growth slowed in August to 1.2 percent, the lowest in more than 12 years, due to base effect that offset a rebound in prices for agricultural and oil product prices, a report showed Monday.
Consumer prices advanced 1.2 percent in August from a year before, down from a 1.5 percent on-year gain tallied in the previous month, according to Statistics Korea.
The August figure was the lowest since a 1.1 percent on-year gain tallied in May 2000. The growth remained in the 1 percent level for two straight months, and stayed below the midpoint of Bank of Korea (BOK)'s inflation target band of 2-4 percent for six straight months.
The last month's fall was mainly attributed to base effect. In August 2011, consumer prices surged 4.7 percent on an on-year basis, the highest in nearly three years.
From a month earlier, the consumer prices were up 0.4 percent in August. It was the first rebound in three months following a 0. 1 percent decline in June and a 0.2 percent fall in July.
The rebound came as agricultural and oil products prices jumped due to extreme weather and rising crude prices. "A rebound in prices for fruits, vegetables and oil products served to a rise in consumer price growth on an on-month basis. But, the consumer price growth fell on an on-year basis due to base effect," said Jun Min-gyu, an economist at Korea Investment & Securities.
Core consumer prices, which exclude volatile agricultural and oil product prices, rose 1.3 percent on-year in August, up from a 1.2 percent on-year advance in the previous month. The OECD-method core CPI, excluding food and energy prices, gained 1.2 percent last month.
The fresh food price index, a gauge of fruits and vegetables, jumped 4.6 percent in August from a month earlier due to a scorching heat during the summer season. Vegetable prices surged 8 percent last month, and fruit prices advanced 5.7 percent.
Prices for agricultural livestock and fishery products climbed 1.8 percent on-month in August, the first rebound in five months. Agricultural prices jumped 4.4 percent last month, but prices for livestock and fishery products slid 2.2 percent and 0.6 percent respectively.
Manufactured product prices rose 0.5 percent on-month in August. Processed food prices gained 0.4 percent last month due to a surge in international grain prices, and petroleum product prices advanced 1.8 percent, the first rebound in four months.
Meanwhile, prices for electricity, water and gas surged 6.2 percent on-year in August, unchanged from the figure for July. A hike in electricity prices maintained the prices at a high level.
Service sector prices rose 1.1 percent in August from a year earlier, unchanged from the previous month, due to the persistent policy effect. The South Korean government was offering subsidies for school meals and childcare fees, sending the private service prices to remain at the low level.
Public service prices edged up 0.3 percent on-year in August, with private service charges advancing 0.7 percent last month, but the price hike in the housing rental services stayed at the high level of 4.0 percent over the same period.
Among the service sector items, prices for using childcare facilities plunged 34.0 percent on-year in August, and prices for school meals tumbled 19.1 percent as the government widened its free school meal program. Preschool tuitions dropped 11.1 percent last month, and the telecommunication fees retreated 6.4 percent as domestic wireless carriers lowered their service charges in a bid to meet the government's efforts to tame inflation.