South Korea Sept producer inflation up but stays low

SEOUL, Oct 11 (Reuters) - South Korean annual producer price inflation quickened for a second consecutive month in September but remained subdued due to the economic slump, data showed on Thursday, hours before the central bank's policy meeting.

The producer price index (PPI) rose 1.0 percent in September from a year earlier as bad weather hit supplies of farm products, accelerating from a 0.3 percent gain in August and a 0.1 percent drop in July, central bank data showed.

The pace of increase also marked the fastest since May this year but came far below the average of 6.1 percent seen in 2011 or the central bank's consumer inflation target of 3 percent.

The Bank of Korea is widely expected to cut the policy interest rate

at a meeting due later in the day as Asia's fourth-largest economy slowed while inflation remained low, a Reuters survey showed.

Its monetary policy committee starts the meeting at 9 am (0000 GMT) and usually announces its decision at around 10 am.

On a month-to-month basis, the index rose 0.7 percent in September after an increase of the same 0.7 percent in August, the Bank of Korea data showed.

Producer prices of vegetables shot up 30.2 percent in September from a year earlier, compared to a 3.4 percent fall recorded in August, while fruit prices jumped 30.5 percent last month from a year earlier, the data showed.

Percentage changes in South Korea's producer price index, released by the Bank of Korea (not seasonally adjusted):

SEPT AUG SEPT AUG (MTH/MTH) (YR/YR) PPI 0.7 0.7 1.0 0.3 MAJOR CATEGORIES: Agricultural, fisheries, 5.9 5.5 7.4 -2.9 forestry products Industrial goods 0.7 0.6 0.0 -0.2 Electricity, tap water, gas -0.1 2.7 7.5 7.8 Services 0.0 0.1 1.3 1.0

NOTE: Industrial goods, which include petrochemicals, textiles and electronics, have a 64.48 percent weighting in the overall index, compared with 26.44 percent for service charges and 4.36 percent for farm and fisheries products.

(Reporting by Christine Kim; Editing by Choonsik Yoo)

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