South Korea Faces Difficulties on Oil Costs, Lee Says

South Korea’s President Lee Myung Bak said the economy faces difficulties from rising oil and food costs and vowed to pursue policies to ease the burden on consumers.

“Our conditions are very difficult. International oil prices doubled in the last year and grain and raw-material costs are surging,” Lee said in a speech delivered today in Seoul. “Rising prices and a slowdown in the economy are putting our economy in a difficult situation.”
Rising commodity prices have cooled spending by consumers and businesses as they increase households’ living costs and erode corporate profit margins. Inflation accelerated to a seven-year high of 4.9 percent in May and the economy grew at the slowest pace in more than a year in the first quarter.

The finance ministry said yesterday there are clearer signs the economy is in a “downturn” as domestic demand weakens and prices climb because of surging oil costs.

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