Producer prices in South Korea surged by 2.5% in April, marking the largest increase in 28 years. The rise is attributed to a sharp increase in oil product prices due to the ongoing conflict in the Middle East, raising concerns that this will pressure consumer prices.
According to preliminary statistics released by the Bank of Korea on May 21, the producer price index for April was recorded at 128.43, the highest increase since February 1998. This marks six consecutive months of rising producer prices since November of last year, with significant contributions from coal, oil products, and chemical products.
By category, agricultural, forestry, and fishery products fell by 1.0% compared to the previous month, while manufactured goods rose by 4.4%. Electricity, gas, water, and waste services saw increases of 0.3% and 0.8%, respectively.
While agricultural products (-4.0%) and fishery products (-3.2%) decreased, coal and oil products surged by 31.9%, and chemical products rose by 6.3%. Transportation services increased by 1.6%, and financial and insurance services rose by 3.0%. The latter saw a 26.2% increase compared to the same month last year, the highest rate since the Bank of Korea began tracking these statistics in 1995, driven by rising brokerage fees due to stock market gains.
Notable price changes included a 94.8% increase in solvent prices, which skyrocketed by 258.1% year-on-year. Diesel prices rose by 20.7% compared to March, while polyethylene and polypropylene prices increased by 33.3% and 32.0%, respectively.
During the same period, DRAM and computer memory prices rose by 37.8% and 10.7%, respectively, with year-on-year increases of 396.0% and 180.4%.
The domestic supply price index, which includes imported goods, rose by 5.2% from the previous month. Raw material prices surged by 28.5%, while intermediate goods and final goods increased by 4.3% and 0.5%, respectively. By usage, capital goods, consumer goods, and services all saw increases of 0.5%.
The total output price index, which includes domestic shipments and exports, also rose by 3.9% from March, with manufactured goods increasing by 5.8%.
The Bank of Korea indicated that rising producer prices could act as an upward pressure on consumer prices. Lee Moon-hee, head of the price statistics team at the Bank of Korea, stated, "Supply disruptions and price increases for raw materials due to the ongoing Middle East conflict are likely to impact consumer prices through producer prices with a time lag." He added, "There may be differences in the extent of fluctuations between producer prices and consumer prices due to discounts at the distribution stage or government policies."
* This article has been translated by AI.
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