S. Korea Will Take Steps to Achieve Inflation Target, Kim Says

By Seyoon Kim

July 22 (Bloomberg) -- South Korea's government will take ``reasonable'' steps to help stabilize prices to try to achieve a government forecast for inflation, Vice Finance Minister Kim Dong Soo said.

``Oil prices fell in the past week, but inflation is still a big concern for the people,'' Kim said at the start of the weekly meeting of ministries in Gwacheon to discuss stabilizing prices. ``The government will take reasonable steps and will try harder to achieve the inflation target.''

Record oil costs and an 8.8 percent drop in the value of the won against the dollar this year drove consumer prices up 5.5 percent in June from a year earlier, a decade high. Policy makers stepped up efforts to slow a decline in the South Korean won, which has increased the cost of imported goods.

The Bank of Korea kept its benchmark interest rate unchanged at 5 percent last week, the highest level in seven years, saying it expects inflation will accelerate and economic growth will slow.

The finance ministry on July 2 raised its forecast for inflation in 2008 to 4.5 percent, the highest in 10 years and up from its March prediction of 3.3 percent.

Kim today asked ministries to ``closely monitor'' prices as well as supply and demand and told them to take ``preemptive measures'' to stem inflation.

To contact the reporter on this story: Seyoon Kim in Seoul at skim7@bloomberg.net