By Na Jeong-ju
Staff Reporter
Import prices rose at the fastest rate in more than nine years in February, reflecting surges in international prices of crude oil, grain and metals and the won's weakness against major currencies, the Bank of Korea (BOK) said Sunday.
Import prices grew 22.2 percent from a year ago in February, accelerating from a 21.2 percent rise in January. It was the sharpest rise since October 1998, when prices surged 25.6 percent.
``The faster rise in import prices is attributed to the hike of raw material prices and the fall in the value of the Korean currency,'' the BOK said.
Crude oil prices rose 3.2 percent last month from a month ago, while prices of beans and wheat surged 9.4 percent and 17 percent, respectively. Prices of steel, copper, aluminum and gold posted double-digit gains, according to the central bank.
The rise in import prices will fuel manufacturing costs and will ultimately push up consumer prices.
The bank said last week that producer prices, prices charged by manufacturers on their goods and services, rose 6.8 percent from a year ago in February, marking the steepest rise since November 2004, when it grew 6.8 percent. Reflecting a surge in manufacturing costs, consumer prices rose 3.6 percent in February from a year ago, remaining above the central bank's target range of 2.5 to 3.5 percent for the third consecutive month.
The data came amid rising concerns about inflation. The won's steep fall against the U.S. dollar and the Japanese yen over the past weeks has raised inflationary pressure.
Many economists fear that the country will enter the spiral of an economic downturn despite robust export growth as the steep rise in commodity prices is fueling inflation and denting corporate earnings.
On Friday, the won dropped for the 11th consecutive session against the dollar, closing at 997.3 won per dollar, which was the won's weakest level since Jan. 18, 2006. For the 11 days, the Korean currency shed 60.8 won.
The won also hit the lowest level in 38 months against the yen on the same day, closing at 995.3 won per 100 yen.
Many dealers say it is a matter of time that traders will need more than 1,000 won to buy one dollar on the Seoul currency market.
Economists say prices of oil and other raw materials will remain strong this year on the dollar's global weakness and growing inflation risks.
``The prospect of an economic slowdown in the United States, a weak dollar and rising inflationary pressures around the world will affect the global demand for raw materials,'' the Korea Center for International Finance said in a recent report. ``Strong demand for raw materials in developing countries, such as China and India, is also one of the key variables.''