The won-denominated import price index stood at 160.09, down 1.0 percent from June after a revised 4.2 percent decline the previous month. The year-on-year rate nevertheless remained in double digits at 18.7 percent.
Measured in contract currencies, however, import prices rose 0.9 percent from June and 10.4 percent from a year earlier.
The divergence suggests overseas procurement costs were rising again, but the stronger won prevented the increase from appearing in the headline index most relevant to domestic prices.
The average won-dollar exchange rate fell to 1,497.43 in July from 1,527.30 in June, meaning the won strengthened 2.0 percent on a monthly-average basis, though it remained 8.9 percent weaker than a year earlier.
The exchange rate fell as low as 1,418.0 won during daytime trading on the morning of July 31, marking the won’s strongest level since October 2025.
The won’s advance also coincided with market expectations that part of the $26.5 billion raised through SK hynix’s Nasdaq American depositary receipt offering, completed on July 14, would eventually be converted into won for domestic investment, adding to anticipated dollar supply.
The won stood at 1,419.4 per dollar at the 3:30 p.m. close in Seoul on Aug. 13, down nearly 80 won from its July average despite weakening 3.7 won from the previous session.
Lower oil prices reinforced the currency effect, with Dubai crude averaging $76.75 a barrel in July, down 3.4 percent from June but still 8.3 percent higher than a year earlier.
Raw-material import prices rose 0.8 percent as a 24.8 percent jump in liquefied natural gas outweighed a 4.8 percent decline in crude oil.
Intermediate-goods prices fell 2.2 percent, led by coal and petroleum products, primary metals and chemicals, while capital-goods prices declined 1.8 percent.
Consumer goods edged down 0.1 percent, but the details were mixed. Durable and semi-durable goods rose 1.3 percent while nondurables fell 1.4 percent, with mobile phones up 10.2 percent and beef down 6.0 percent.
Food-related pressures were also uneven, with agricultural and marine products rising 2.2 percent and 3.8 percent, respectively, while livestock products fell 6.3 percent and processed food dropped 3.2 percent.
The softer won-based import reading could reduce pipeline pressure on consumer prices, which fell 0.2 percent from June and rose 2.8 percent from a year earlier in July, easing from 3.2 percent annual inflation in June.
The signal is not uniformly disinflationary, however, because import prices remained far above year-earlier levels and core consumer inflation excluding food and energy edged up to 2.6 percent from 2.5 percent.
Export prices moved in the opposite direction, rising 1.0 percent from June and 49.1 percent from a year earlier, the fastest annual increase since March 1998.
Contract-currency export prices rose 3.0 percent on the month and 37.8 percent on the year, showing that the advance was not merely an exchange-rate effect.
Prices for computer, electronic and optical products climbed 4.8 percent from June and 122.3 percent from a year earlier, with DRAM prices up 6.6 percent on the month and 270.3 percent on the year.
Export volumes increased 20.0 percent from a year earlier and export value jumped 64.2 percent, while import volume and value rose 14.7 percent and 25.8 percent, respectively.
The net barter terms of trade improved 24.7 percent from a year earlier and the income terms of trade rose 49.7 percent as semiconductor prices and shipment volumes continued to outpace import costs.
July’s decline therefore looks less like broad imported disinflation than a currency cushion over still-firm external costs.
For households, the durability of that relief will depend on whether the won remains firm and energy prices stay contained after the influence of temporary corporate dollar flows fades.
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AJP Takeaways
• South Korea’s won-based import prices fell 1.0 percent in July for a second consecutive monthly decline, even as contract-currency prices rose 0.9 percent, showing that the stronger won masked an underlying rebound in overseas costs.
• The won strengthened 2.0 percent on a monthly-average basis, touched 1,418.0 per dollar on July 31 and stood at 1,419.4 at the Aug. 13 daytime close, with anticipated conversion of part of SK hynix’s ADR proceeds adding to dollar supply.
• Lower import costs could ease future consumer inflation, but import prices remained 18.7 percent higher than a year earlier as semiconductor-driven export prices surged 49.1 percent, their fastest increase since March 1998.
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