Inflation rate to near 5% in 2nd quarter

Chon Chol-Hwan, governor of the Bank of Korea (BOK), feared Friday that the nation`s inflation rate for the second quarter of this year would approach 5 percent due to higher utility fees and the won`s depreciation since the latter half of last year.

Gov. Chon met with reporters after attending the Monetary Board meeting and said that the government would find it difficult to achieve the inflation goal unless the won-dollar exchange rate stabilizes and the hike in utility fees is curbed in the near future.

He predicted that growth in consumer prices for the second quarter of this year would reach 5 percent, beyond the initial target of 4 percent.

Chon explained that his bank set the inflation goal based on the assumption that the exchange rate would range from 1,220 to 1,250 won to the dollar. ``So, if the exchange rate remains at the level of 1,300 won, the government will find it difficult to control prices,`` he said. However, he said, the bank would maintain the inflation goal at the current level of 2 to 4 percent for the time being.