South Korean producer prices grew at the fastest clip in three years in 2011 on a sharp rise in crude oil prices, the central bank said Monday.

The producer price index, a barometer of future consumer inflation, rose 6.1 percent on-year in 2011, up sharply from a 3.8 percent gain in 2010, the Bank of Korea said. It marked the highest annual increase since a 8.6 percent surge in 2008.

In December, producer prices climbed 4.3 percent from a year earlier, the slowest gain in 15 months, as vegetable and fruit costs dropped, the BOK said.

The full-year jump in producer prices was attributable to higher oil costs, the central bank said. Prices of Dubai crude, South Korea’s benchmark, surged 35.6 percent annually in 2011 and petroleum product prices rose 21 percent, according to BOK data.

“Even though global raw material prices showed a downward trend, crude oil prices stood at a three-digit number in all months of 2011 except January,” said Lee Byung-doo, a BOK economist.

Despite the slowdown in December, volatile oil prices and sanctions against Iran will likely exert upward pressure on producer prices in coming months, he said.

“If raw material prices stabilize, it will have a positive impact on consumer prices. But because of the Iran issue, they may not go down easily,” Lee said.

South Korea’s consumer prices rose 4 percent in 2011, hitting the upper ceiling of the BOK’s 2-4 percent target band. The central bank forecasts consumer prices to grow 3.3 percent this year.

President Lee Myung-bak and the BOK Gov. Kim Choong-soo said price stability will be their top priority this year.

The BOK froze the benchmark rate at 3.25 percent for the sixth straight month in December on higher external economic uncertainty.

Policymakers are scheduled to meet on Jan. 13 for the first rate-setting meeting of this year. 

(Yonhap News)