SEOUL (Reuters) – South Korea’s import prices accelerated in December at the fastest pace in five months, central bank data showed on Wednesday, signalling renewed inflationary pressures due to a weakened local currency.
The import price index, in terms of local currency, rose 7.0% in December from a year earlier, the fastest since last July, according to the Bank of Korea.
It was the second consecutive month of gains in import prices, which affect consumer prices with a time lag, after a rise of 2.8% in November.
The won ended December down 5.2% against the dollar, marking its largest monthly decline in 22 months, after reaching its weakest level since March 2009 due to domestic political turmoil.
Last month, South Korea’s consumer inflation quickened to 1.9%, exceeding market expectations and near the BoK’s 2% target, with the central bank flagging a possibility of inflation accelerating further this month.
The BoK is expected to lower interest rates by a quarter percentage point to 2.75% on Thursday, a month earlier than previously anticipated, to support a struggling economy amid risks from political uncertainty.
The export price index rose 10.7% last month, also the fastest in five months, after climbing 7.0% in November.