South Korea's consumer price inflation fall below 1% in 4 months

South Korea's consumer prices rose 0.8 percent in May from a year earlier, falling below 1 percent for the first time in four months, a government report showed on Wednesday.

The consumer price inflation continued to decline from 1.3 percent in February to 1 percent in March and April each, before sliding further to 0.8 percent in May, according to Statistics Korea.

The slower May increase was attributable to lower gain in fresh food prices, especially vegetable prices that had jumped in recent months.

Oil product prices plunged 11.6 percent in May from a year earlier on the back of cheaper crude oil, contributing to lower headline inflation. The fall in oil product prices dragged down the overall consumer price inflation by 0.49 percentage points in May.

Service prices, however, advanced 2.2 percent in May on a yearly basis, raising the headline inflation by 1.24 percentage points last month. Subway fares jumped 15.2 percent, and intra-city bus charges increased 9.6 percent.

Prices for Jeonse, South Korea's unique home lease contract, climbed 3.7 percent. Jeonse is a contract between two households where a landlord grants the residence right for two years to a tenant, who in turn lends a certain amount of money, or deposit, to the landlord.

Core consumer prices, which exclude volatile prices of agricultural and oil products, gained 1.6 percent in May from a year ago. The OECD-method core consumer prices, excluding energy and food, advanced 1.9 percent last month.

The core headline inflation hovered around the upper range of 1 percent, indicating the relatively stable inflation except for volatile food prices.

The fresh food price index, which gauges fruits and vegetable prices, rose 3.5 percent in May from a year earlier, down from a 9.6 percent increase in April. The index soared 9.7 percent in February and March each.

The so-called livelihood prices, which measure more than 100 daily necessities, inched up 0.1 percent.

Prices for agricultural, livestock and fishery products rose 1.3 percent on-year in May, the lowest increase in 13 months except in April when farm goods prices fell 0.5 percent.

The slower rise in farm goods prices came as fresh vegetable crops came out in the market. Chinese cabbage prices surged 43.4 percent in May, but it was lower than the April's 118.3 percent increase.

Prices for garlic and crab advanced 57.2 percent and 36.9 percent each. Beef prices gained 19.0 percent, but chicken prices declined 10.4 percent. Prices for oriental melon, strawberry and egg slumped 17.7 percent, 17.0 percent and 14.1 percent respectively.

Industrial goods prices declined 0.9 percent last month on the back of cheaper crude oil. Prices for electricity, gas and tap water tumbled 6.4 percent on lower city gas prices and a fall in provincial heating costs.