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South Korean inflation rate touches lowest point in more than 12 years

SEOUL -- South Korea's inflation rate was the lowest for more than 12 years in August, official figures showed Monday, raising prospects of an imminent interest rate cut.

The consumer price index rose 1.2 percent year-on-year last month, the slowest pace since the 1.1 percent of May 2000, Statistics Korea said.

The figure compared with a 1.5 percent increase in July.

Core inflation, which excludes volatile energy and food prices, stood at 1.3 percent year-on-year in August, up from the 1.2 percent figure posted the month before.

The government data was released 10 days before the central Bank of Korea is due to meet to discuss a possible interest rate cut amid signs of cooling economic growth.

In its last meeting Aug. 9, the central bank's monetary policy committee had kept the benchmark seven-day repo rate unchanged at 3 percent.

Finance Minister Bahk Jae-wan was quoted by the Yonhap news agency on Monday as telling a special meeting on economic revitalization that all efforts would be made to keep inflation under control.

“The government will continue to watch any uncertainties while putting in place measures to counter any rise of food prices caused by a shortage of supplies resulting from recent typhoons,” Bahk said.

The minister also noted the drag on the domestic economy of a recent slowdown in exports caused by economic troubles in European and U.S. markets.

South Korean exports fell for the second consecutive month in August, down 6.2 percent from a year earlier to US$42.97 billion. July exports were down 8.8 percent year-on-year.

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