South Korean inflation picks up

Inflation hit its highest rate since 2001

Inflation in South Korea has hit a seven-year high as a result of rising energy and food costs.

Consumer prices in May were up 4.9% from a year earlier - the strongest growth since June 2001.

Economists had expected the annual rate of inflation to hit 4.3% in May, up from April's level of 4.1%.

The inflation rate has now been above the central bank's target for six months in a row, raising expectations of an increase in interest rates.

Park Sang-Hyun, chief economist at CJ Investment & Securities, said that the jump in inflation was primarily caused by rising oil and raw material prices.

"In the future, there may be room for an interest rate hike if prices continue to go higher, but I rather expect the government would let the won strengthen."