S Korea inflation at 1.5% moderating to 12-year low

Inflation in South Korea moderated to a 12-year low in July, easing the way for authorities to boost growth.

Consumer prices rose 1.5% from a year earlier, Statistics Korea said, the slowest since May 2000. In June prices rose 2.2%.

Low inflation gives the central bank room to reduce the cost of borrowing, to encourage businesses to expand.

South Korea, like other Asian countries, has reduced 2012 growth forecasts.

Signs of a slowdown in South Korea have worried authorities in Seoul.

Last month, the central bank unexpectedly cut its key interest rate for the first time in more than three years.

It also revised its forecasts for economic growth for this year, down from 3.5% to 3%.

"Policymakers are likely to become more aggressive in trying to boost the economy, with several interest rate cuts and a slew of policies to support domestic demand," said Jun Min-kyoo from Korea Investment & Securities.