South Korea's inflation rate hit a three-year high
in August as higher food costs continued to put pressure on consumer prices.
Prices
in August rose by 5.3% from a year earlier, latest data showed, up from a 4.7%
increase in July.
This
is the eighth successive month that inflation has remained above the central
bank's target of 4%.
However,
analysts said that despite the surge in prices, the central bank may not raise
interest rates immediately.
"Although
inflation was high in August, external uncertainties such as a US economic
slowdown and European debt problems remain," said Park Sang-Hyun of Hi
Investment & Securities.
"It
will therefore be tough for the Bank Of Korea to raise interest rates this
month." he added.
'Additional burden'
The
jump in consumer prices has come despite measures by the central bank to rein
in price growth.
The
Bank of Korea has raised interest rates three times this year in a bid to
control rising consumer prices.
To
make matters worse for the central bank, data out on Wednesday showed that
factory output in Korea fell 0.4% in July, from a year ago.
Meanwhile,
authorities have also had to juggle between looking to boost domestic demand
while trying to control the surging household debt in the country.
While
the authorities have said that fighting rising prices is one of their top
priorities, analysts said the combination of these other factors had limited
the central bank's options.
"The
recent tightening of loan regulations by the government has already put an
additional burden on the domestic economy," said Suh Dae-Il of Daewoo
securities.
"It
is unlikely that the Bank of Korea will exercise monetary policy at the risk of
further slowdown."
