Inflation rate hits 5.3 pct in April, highest in 29 months

Consumer prices are surging this year. Inflation coming on top of an economic downturn is fueling fears for stagflation, where economic growth slows down while consumer prices rise.

The Ministry of Economy and Finance and the National Tax Service announced Monday that consumer prices rose 0.6 percent in April from a month earlier and 5.3 percent from the same period of last year.

The year-on-year increase rate marks the highest figure for 29 months since November 1998, when the rate stood at 6.8 percent. This was also the first time since then that prices had risen by more than 5 percent, officials said. As of the end of April, consumer prices had risen 2.5 percent from the end of last year. The average inflation rate between January and April over the same period of last year recorded 4.6 percent. Consequently, the government is expected to find it difficult to achieve its goal of keeping the inflation rate at 3 percent this year.

Director general Oh Kap-Won of the ministry`s Welfare and Consumer Policy Bureau, attributed April’s increase to a sharp rise in prices of agricultural and fisheries products such as tomatoes, strawberries and peppers. The price rise was caused by heavy winter snowfalls, which triggered a delayed release of the products, he said.

However, he predicted that consumer prices would begin to stabilize in May as there would be few factors to boost them.

Owing to a sharp rise in prices of agricultural and fisheries products, the inflation rate felt by consumers jumped 6.5 percent in April from a year earlier and 0.9 percent from the previous month, well over the real increase rate of consumer prices, officials said.

Choi Young-Hae moneychoi@donga.com