Producer Prices Hit Another Record High Amid Soaring Raw Material Costs

[Asia Economy Reporter Seo So-jung] The Producer Price Index (PPI) has once again reached an all-time high due to rising international oil prices and raw material costs.

According to the Bank of Korea on the 21st, the provisional PPI for March stood at 116.46 (2015=100), marking a record high. Last month, the PPI rose 1.3% month-on-month, driven mainly by manufactured goods, continuing its upward trend for the third consecutive month. Compared to the same month last year, it increased by 8.8%, maintaining a rising trend for 16 consecutive months.

The producer price measures the price changes of goods and services supplied by domestic producers to the market and is used as an economic indicator. The PPI had risen for 13 consecutive months until November last year, remained unchanged in December, and resumed its upward trend from January.

Son Jin-sik, head of the Price Statistics Team at the Bank of Korea’s Economic Statistics Bureau, explained, "As international oil and raw material prices rose, the producer price increased by 1.3% month-on-month, mainly in manufactured goods. This is the highest level in 5 years and 2 months since January 2017 (1.5%)."

Month-on-month, agricultural, forestry, and fishery products rose 0.2%, led by livestock products. Manufactured goods such as coal and petroleum products and chemical products increased by 2.3% due to rising raw material prices including international oil prices. The coal and petroleum products index (194.75) and the chemical products index (121.21) themselves are at all-time highs. Electricity, gas, water, and waste services rose 0.2%, and services, including restaurant and accommodation services, increased by 0.3%.

The Domestic Supply Price Index, which measures price changes of goods and services supplied domestically, also rose for three consecutive months. Raw materials (8.0%) and intermediate goods (2.0%) increased, leading to a 2.3% month-on-month rise. Compared to the same month last year, it rose 13.7%, continuing an upward trend for 14 consecutive months.

The Total Output Price Index, which measures price changes of goods and services based on total production including domestic shipments and exports, also rose 2.2% month-on-month, driven by manufactured goods (3.4%). Compared to the same month last year, it increased by 12.0%.