October Producer Prices 'Plunge'... Agricultural Product Prices Down 15% Beyond Seasonal Effects (Comprehensive)

Bank of Korea October Producer Price Index

[Asia Economy Reporter Eunbyeol Kim] Agricultural product prices, which had been soaring due to typhoons and the rainy season, fell, leading the producer price index in October to turn downward for the first time in six months. Industrial goods, including petroleum and coal products, also showed a decline due to the drop in international oil prices.

According to the Bank of Korea on the 20th, last month's producer price index stood at 102.92 (2015=100), down 0.5% from September's 103.42. This marks the first decline in six months since April (-0.9%). The producer price index reflects price changes of goods and services supplied by domestic producers to the market and is used as a leading indicator of consumer prices.

Prices of agricultural, forestry, and fishery products fell 9.6% compared to the previous month. As the effects of the rainy season and typhoons ended, shipments increased, and demand from the Chuseok holiday disappeared, causing agricultural product prices to drop. Agricultural prices plunged 15% month-on-month, centered on items such as napa cabbage (-58.0%), apples (-34.6%), and watermelons (-61.8%). Livestock products, including pork (-11.4%) and chicken (-9.7%), also fell 5.4%, while fishery products declined by 1.1%.

Gang Hwan-gu, head of the Price Statistics Team at the Bank of Korea's Economic Statistics Bureau, said, "Prices of agricultural, forestry, and fishery products all fell as they escaped the effects of the prolonged rainy season and typhoons." He added, "While prices of some agricultural items may rise due to increased demand for kimchi-making in November, the overall impact is expected to be limited."

With the decline in international oil prices, prices of industrial goods also dropped by 0.1%. Last month, the average price of Dubai crude oil was $40.67 per barrel, down 2.0% from $41.51 in September. As a result, coal and petroleum products fell 3.2%. Computer, electronic, and optical equipment, including DRAM (-8.5%), decreased by 0.3%, reflecting a drop in semiconductor prices.

Last month, the producer price index for services recorded no change month-on-month, as real estate services rose by 0.2%, while financial and insurance services fell by 0.4%. Electricity, gas, water, and waste services declined 0.7%, with electricity, gas, and steam dropping 0.9%.

The domestic supply price index, calculated by combining the producer price index and import price index, fell 1.0% month-on-month and 3.4% year-on-year. The total output price index, which measures price changes of goods and services based on total output including exports beyond domestic shipments, decreased 0.9% month-on-month and 2.0% year-on-year.