South Korea's producer prices, which had risen for nine consecutive months, halted their upward trend last month and remained flat. Computers and electronic devices rose, but petroleum products declined amid falling international oil prices, leaving the overall index unchanged. However, compared with a year earlier, prices still recorded a high rate of increase, and secondary ripple effects from the Middle East conflict are expected to emerge, meaning it is too early to be reassured.
According to the "June Producer Prices" released by the Bank of Korea (BOK) on the 22nd, the producer price index last month stood at 130.03 (2020=100), nearly the same as the previous month's 129.98. After rising for nine consecutive months since September last year, the index remained flat. Compared with the same month a year earlier, it rose 8.6%, unchanged from the previous month. This marks the largest increase since July 2022 (9.2%).
By category, agricultural, forestry and fishery products rose 0.7% on the back of a rise in livestock products (2.1%), while electricity, gas, water and waste rose 1% on higher industrial city gas prices (10.6%). Among services, the increase in financial and insurance services (2.5%) was notable. In contrast, manufactured goods fell 0.3% as coal and petroleum products (-5.3%) and chemical products (-1.8%) declined.
By individual item, computer storage devices (10.3%) and industrial instruments (18.2%) posted large gains, while brokerage commissions (6%) continued their upward trend. In contrast, potatoes (-22.9%), naphtha (-23.5%), jet fuel (-23.4%), and international air passenger services (-6.5%) saw large declines.
The domestic supply price index, which measures price changes including imported goods, was recorded at 139, up 0.7% from the previous month. This was driven by increases in raw materials (2.1%), intermediate goods (0.5%), and final goods (0.5%). Compared with the same month a year earlier, it rose 13.2%.
Regarding the July outlook, Lee Moon-hee, head of the BOK's price statistics team, said, "As of mid-July, international oil prices have fallen 10% compared with the same period the previous month." He added, "However, upward and downward factors are mixed, including a resumption of armed conflict between the United States and Iran and an increase in wholesale rates for industrial city gas." He continued, "While the month-on-month rise in producer prices has halted, the secondary ripple effects from the Middle East conflict appear to be persisting," adding, "This is expected to act as an upward factor for consumer prices for the time being."
