August 5, 2008


High grain prices stoking inflation in South Korea


International grain prices are expected to remain sky-high down the road due to increased demand and speculation, stoking South Korea's already soaring inflation, a report said Sunday (Aug 3, 2008).


South Korea's consumer price index jumped 5.9 per cent in July from a year earlier, the biggest rise in ten years, according to the National Statistical Office.


The Korea Rural Economic Institute points to biofuel demand as the culprit for the rapid rise in grain prices.


International corn prices, at about US$410 per tonne, were now triple what they were in the first half of 2006, the institute said.


Soy prices have also more than doubled to US$737 per tonne and wheat prices jumped by 1.68 times to US$310.


South Korea largely depends on imports for its grains, except for rice.


The price hikes of these grains meant higher inflation for the country and the government would have to brace for "structural agflation," in which high food prices build up inflationary pressure.

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