South Korean producer inflation moderated to a 29-month low as meat and fish prices and some service fees declined, according to a report released after central bankers held rates unchanged for a 12th month.

Prices rose 1.9 percent in May from a year earlier, the smallest gain since December 2009, after a 2.4 percent increase in April, the Bank of Korea said in a statement today. They fell 0.6 percent from April.

The Bank of Korea held off from altering borrowing costs last week as easing consumer inflation gave policy makers time to gauge how Europe’s debt crisis and China’s slowdown will affect the economy. Consumer inflation remained at a 21-month low of 2.5 percent in May.

To contact the reporter on this story: Eunkyung Seo in Seoul at eseo3@bloomberg.net

To contact the editor responsible for this story: Paul Panckhurst at ppanckhurst@bloomberg.net