S. Korea Inflation to Ease on Lower Oil, Grain Prices, Kim Says

By Seyoon Kim

Aug. 13 (Bloomberg) -- South Korea's inflation at a 10-year high may ease in the second half because of a drop in oil and grain prices, Vice Finance Minister Kim Dong Soo said.

``We will closely monitor prices and we're hoping prices will stabilize in the second half of this year,'' Kim said on radio today ahead of a weekly government meeting in Gwacheon. ``Stabilizing prices is our priority.''

A surge in oil and food costs pushed up annual consumer prices by 5.9 percent in July from a year earlier, the biggest gain since November 1998.

Kim said the government plans to freeze water, train and highway toll fees while it will try to minimize increases in electricity and bus charges.

The $970 billion economy grew at the slowest annual pace in more than a year last quarter as consumers reined in spending amid soaring living costs. In an effort to stem inflation, the Bank of Korea unexpectedly raised its benchmark interest rate to an eight-year high of 5.25 percent on Aug. 7.

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