South Korean inflation in May touches a 14-year-low

SEOUL (AFP) - South Korea's inflation touched a 14-year low in May on falling fuel costs and stabilising food prices, government data showed Monday.

The consumer price index for May rose 1 per cent from a year ago - the slowest rate since September 1999 - state-run Statistics Korea said. It marked the seven straight month that inflation has stayed under 2 per cent.

On-year inflation in April had stood at 1.2 per cent.

The figure was comfortably below the central bank's target range of 2.5 to 3.5 percent, leaving room for further monetary easing to spur growth after a key interest rate cut in May.

Core inflation, which excludes volatile oil and food prices, gained 1.6 per cent from a year earlier and 0.4 per cent from April.

Prices of fuel such as gasoline and diesel fell 2.6 per cent from the same month in 2012 and 1.3 per cent from the previous month.

Prices of key food items including meat and vegetables posted a 0.5-per cent rise from May a year ago and fell 0.8 per cent from April.

In a Dow Jones poll, all nine surveyed analysts expect the Bank of Korea to keep interest rates unchanged in June, with six expecting the rate to be frozen throughout 2013.