South Korea’s import prices rose in March at their slowest pace in two years, giving the central bank more room for maneuver amid a weakening in the country’s growth momentum.
Import prices in won terms rose 3.5 percent in March from a year earlier, decelerating from a 5.2 percent year-on-year rise in February, according to Bank of Korea data released Monday. Import prices are seen as leading indicators of domestic inflation.
March’s increase was the slowest in the two years since import prices fell 4.3 percent in March 2010.
“The base of comparison in the year earlier period was high, contributing to the slowdown,” the BOK said in a statement. “Oil prices continued to rise in March from the previous month, but the pace was slower when compared with last year.”
The price of Dubai crude, the benchmark for Asian trade, rose 5.4 percent in March from the previous month, the BOK said.
On a month-on-month basis, import prices rose 1.7 percent in March, accelerating from a 0.5 percent gain in February, because of the higher oil prices and the won’s 0.2 percent depreciation against the dollar, the BOK said.
Export prices remained unchanged in March from a year earlier, compared with a 2.1 percent year-on-year gain in February. On a month-on-month basis, export prices rose 0.5 percent, reversing a 0.6 percent decline in February.
Last week, the BOK kept its benchmark interest rate steady at 3.25 percent for a 10th straight month, citing external uncertainties and elevated domestic inflation expectations.
The central bank has said a surge in oil prices would pose risks to the Korean economy.