In August, the producer price index rebounded, driven by significant increases in agricultural and livestock prices due to the heat wave. With ongoing rises in international oil prices and city gas rates, there are concerns about further upward pressure on producer prices.
According to the Bank of Korea on September 18, the producer price index for August stood at 129.64 (with 2020 as the base year at 100), marking a 0.2% increase from the previous month’s 129.43. After nine consecutive months of increases from September of last year to May of this year, producer prices fell in July but rose again in August.
By category, prices for manufactured goods, including coal and petroleum products (up 0.4%), increased compared to July, while electrical equipment (down 0.7%) saw a decline, resulting in stable prices overall. Agricultural, forestry, and fishery products rose by 3.8% from the previous month, with agricultural products increasing by 4.9% and livestock products by 2.8% due to the heat wave.
Industrial city gas prices rose by 11.0%, contributing to a 0.9% increase in the combined index for electricity, gas, water, and waste services. Restaurant and accommodation services also saw a 0.6% rise, although financial and insurance services fell by 1.5%, leading to stable service sector prices.
Notably, spinach prices surged by 51.9% compared to July. Other increases included pork (5.4%), various fish (7.3%), canned tuna (9.5%), computer memory (8.8%), and hotel rates (6.5%). Conversely, prices for hydrogen (-7.4%), ignition and other purpose wiring harnesses (-8.8%), and aluminum plates (-3.8%) decreased.
The domestic supply price index, which includes imported goods, fell by 1.3% from the previous month. Intermediate goods (-1.0%), raw materials (-4.6%), and final goods (-0.9%) all saw declines primarily due to imports.
This decline reflects the impact of a 3.4% drop in international oil prices in July and variations in customs clearance times and exchange rates (-6.1%).
When including exports in the total output price index, there was a 1.2% decrease, with manufactured goods (-2.0%) primarily driving the decline.
Looking ahead, producer prices are expected to face upward pressure. Lee Heung-hoo, head of the Bank of Korea's price statistics team, stated, "In September, the resumption of conflicts in the Middle East has led to a significant rise in international oil prices, and wholesale rates for industrial city gas have also increased, which are expected to act as upward factors." He noted that the average international oil price from September 1 to 16 rose by about 29% compared to August, and wholesale rates for industrial city gas increased by 6.6% starting in September.
* This article has been translated by AI.
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