S. KOREA'S CONSUMER PRICES RISE 4.4 PCT ANNUALLY IN JULY.

SEOUL, Aug. 2 Asia Pulse - South Korea's consumer prices in July climbed 4.4 per cent year-on-year and rose 0.6 per cent from a month earlier, a government report said today.

The National Statistical Office (NSO) attributed the July increase to hikes in agricultural product prices and various public and private service charges.

The latest figures showed consumer prices rising 3.5 per cent for the first seven months of this year on an annual basis. The annual consumer price increase of more than 4 per cent is the highest in 16 months.

The sharp hike in consumer prices is expected to re-ignite debate on concerns for stagflation, despite government claims that such fears are unfounded in light of a strong export demand and expected gradual gains in investment and consumer spending in the coming months.

"Heavier-than-expected precipitation during this year's monsoon season contributed to a drop in vegetable, fruit and fisheries output, while higher public transportation and air fares played a part in the rise in consumer prices last month," Je Jung-bong, chief of the office's Price Statistics Division, said.

Je also noted that high crude oil prices were unexpected complications for the government's consumer price targets. He said the 3.5 per cent goal set by the government for 2004 was still valid, but it would depend on the movement of consumer prices and particularly crude oil prices in the next few months.

"As a rule, consumer prices tend to move up in August and September, fall in the next two months before rising again in December with the onset of winter," he said.