South Korea inflation reaches near 10-year high

South Korea’s annual inflation rate was 5.5 percent last month, close to a 10-year high amid soaring prices of oil and other commodities, official figures showed yesterday.

The year-on-year rise in the consumer price index was the biggest since a 6.8 percent climb in November 1998, the National Statistical Office said. Month-on-month, the figure rose 0.6 percent.

The government of South Korean President Lee Myung-bak, who won office in December with a pledge to revitalize the economy, says it is now putting priority on fighting inflation rather than growth.

The central bank earlier yesterday raised its inflation forecast for the whole year to 4.8 percent from an earlier estimate of 3.3 percent. This would be the highest figure since 7.5 percent in 1998.

In the second half, inflation was forecast to hit 5.2 percent on rising energy prices and a weaker won which makes imports dearer, it said.

The figure for last month breached the central bank’s inflation target range of 2.5-3.5 percent for a seventh straight month.

South Korea, the world’s fifth-largest crude buyer, relies entirely on imports for its oil needs.

The inflation rise could put pressure on the central bank to increase its key interest rate this month.

The bank froze the rate at 5 percent for a 10th month last month.