SEOUL: South Korea’s consumer prices rose at their fastest pace in more than a decade in March, as the Ukraine war fuelled surging energy and commodity costs, adding pressure to the central bank ahead of its rate decision meeting next week.

       The consumer price index (CPI) for March rose 4.1% from a year earlier, official data showed, the fastest increase since December 2011 and outpacing a 3.8% rise tipped in a Reuters poll.

       Core inflation, which excludes volatile food and energy costs, also jumped 2.9% from a year earlier, staying at the rate seen in February. The sustained rise in core prices showed surging fuel and raw material costs were feeding through to consumers.

       “We do not see the upward trend in inflation slowing significantly next month,” said Eo Woon-sun, a senior Statistics Korea official. He added that global supply disruptions could worsen amid the Russia-Ukraine war and prices for personal services such as eating out continued to rise.

       The breakdown of data showed the cost of petroleum surged 31.2%, while that of housing rentals and outdoor dining increased 2% and 6.6%, respectively, on year. The cost of electricity, gas and water added 2.9%.

       That puts the Bank of Korea’s (BoK) monetary policy board under pressure to raise its benchmark interest rate even higher. It has hiked rates a total 75 basis points since the pandemic.

       While analysts do not yet expect the BoK to raise rates at its next policy meeting on April 14, the March inflation print, which is double the central bank’s 2% target, means a hike next week is not impossible.

       “If the bank gets to choose either to hike in April or May, April will definitely be better than waiting as the price pressure is growing,” Daishin Securities’ economist Kong Dong-rak said. — Reuters