Seoul, Mar 6 (IANS): South Korean economy is facing consumer price instability amid higher oil prices, the finance ministry said Tuesday.

"Our economy saw employment maintain its recovery trend, and major economic indicators improved due to seasonal factors. But, price instability factors continued amid a rise in oil prices," the Ministry of Strategy and Finance said in a so-called Green Book, a monthly report assessing the nation's economic conditions.

The country's consumer price growth decelerated to 3.1 percent in February from 3.4 percent a month before, but inflation expectation remained at an annual rate of 4.0 percent, the upper ceiling of the Bank of Korea (BOK)'s target band 2-4 percent, reported Xinhua.

Petroleum product prices kept its upward trend amid high oil prices. Prices for Dubai crude oil, South Korea's benchmark, closed at $121.09 a barrel Monday. The price averaged $120.99 per barrel this month, higher than an average price of $116.18 the previous month.

The ministry cautioned that uncertainties surrounding a rise in oil prices grew sharply amid lingering external uncertainties such as Europe's fiscal crisis and the possible global economic downturn. The ministry said it would closely monitor economic conditions at home and abroad, promising that it would strengthen its policy response to achieve economic recovery along with stable prices.