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S Korean producer price index grows most in three years

South Korea's producer price index gained at the fastest pace in three years last month as oil costs rose to a record.

The index, which measures prices paid to producers, advanced 4.4 percent from a year earlier, after a 3.4 percent increase in October, the Bank of Korea said yesterday in Seoul. That was the most since December 2004, when the index rose 5.34 percent.

The increase isn't likely to prompt the central bank to raise interest rates at its next meeting because the US economic slowdown and financial-market turmoil have clouded the outlook for growth. Policy makers have kept the overnight call rate unchanged since August.

"The Bank of Korea will take some time until the global turmoil dies down before any rate hike," said Seo Chul-soo, a fixed income strategist with Daewoo Securities Co in Seoul.

Bank of Korea Governor Lee Seong-tae and his fellow policy makers kept the benchmark interest rate at a six-year high of 5 percent on Friday. The bank delivered two straight increases in July and August to keep soaring lending from fanning asset-price bubbles and inflation.

Bond yields jumped to the highest in more than five years on Friday after Lee said inflation will accelerate.

Prices of industrial goods climbed 5.4 percent from a year before, after October's 3.5 percent gain. Utilities jumped 5.9 percent.

Prices of agricultural, fisheries and livestock produce rose 0.6 percent from a year earlier after gaining 3.4 percent in October, yesterday's report showed.

The price of Dubai crude oil, South Korea's benchmark, has risen 50 percent this year. South Korea buys 97 percent of its energy and resource needs.
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