Listen to article

South Korea's consumer prices climbed at the slowest pace in six months in March as a stronger currency helped cap the cost of manufactured goods, Bloomberg said on Thursday.

The consumer price index rose 2.3 per cent from a year earlier, after gaining 2.7 per cent in February, the statistics office said on Thrusday in Gwacheon.

The median estimate in a Bloomberg News survey of 15 economists was for a 2.7 percent increase. From a month earlier, prices rose 0.3 percent.

The central bank has kept its benchmark interest rate at a record-low two per cent since February last year to support the nation's economy. Kim Choong Soo, who became the new Bank of Korea Governor on Thursday, will raise interest rates 'when the time comes,' online newspaper Edaily cited him as saying this week.

'There will be inflationary pressure in the second half as the job market recovers,' said Lee Chul Hee, an economist at Tong Yang Securities Inc. 'Once there are clear signs of an economic recovery, the central bank may signal rate increases.'

The average value of the Korean won versus the U.S. dollar was 28 per cent higher in March 2010 than in the same month last year. The currency traded at 1,127.15 per dollar as of 2:17 p.m. in Seoul.

Rising prices have prompted some Asian policy makers to start exiting monetary stimulus as the region leads the world out of its economic slump. The Bank of Korea targets annual inflation of between two per cent and 4 percent.

Asia's fourth-largest economy expanded 0.2 per cent in the fourth quarter and Finance Minister Yoon Jeung Hyun has said it's too early to raise interest rates as business investment remains weak and asset prices are under control.

South Korea's exports rose 35.1 per cent in March and industrial production climbed 3.6 per cent in February, more than twice economists' forecasts, as the economy recovers. President Lee Myung Bak has said gross domestic product may increase more than 5 percent in 2010, the fastest pace in three years.

Core prices, which exclude oil and food, climbed 1.5 per cent from a year earlier after a 1.9 per cent increase in February. Prices for agricultural, dairy and fisheries goods rose four percent, and oil products climbed 11 per cent, Thursday's report showed.