Domestic producer prices rose last month at the sharpest pace in 3 years and 11 months, driven by a surge in international oil prices. Petroleum-related products, in particular, posted their largest gain in 29 years since the 1997 foreign exchange crisis.
According to the Bank of Korea on the 22nd, the domestic producer price index for March stood at 125.24 (2020=100), up 1.6% from the previous month. This marks the largest increase in 47 months since April 2022 (1.6%). Prices have now risen for seven consecutive months since September last year.
The surge in international oil prices caused by the Middle East conflict drove up petroleum and related products significantly, pushing producer prices higher.
By category, manufactured goods rose 3.5% from the previous month, led by coal and petroleum products (31.9%) and chemical products (6.7%). The gain in coal and petroleum products was the largest since December 1997 (57.7%). On the other hand, agricultural, forestry, and fishery products fell 3.3%, with agricultural products (-5%) and livestock products (-1.6%) declining.
Among individual items, computer storage devices surged 101.4%, while naphtha (68%), ethylene (60.5%), xylene (33.5%), diesel (20.8%), and DRAM (18.9%) also posted large gains. Strawberries (-42.5%), croaker (-23.3%), and domestic air passenger services (-10.7%) declined.
The domestic supply price index, which measures price changes including imports, also rose 2.3% from the previous month. Raw materials, intermediate goods, and final goods climbed 5.1%, 2.8%, and 0.6%, respectively.
The total output price index for March, which adds exports to domestic shipments, rose 4.7%. Manufactured goods surged by as much as 7.9%, leading the upward trend.
Lee Moon-hee, head of the Bank of Korea's price statistics team, analyzed, "Oil prices have surged and raw material prices have also risen, which will gradually act as upward pressure on producer prices." He added, "Uncertainty over the U.S.-Iran negotiations is very high, making it difficult to predict the trajectory going forward."
