Producer Prices Rise for 7 Consecutive Months... Spinach and Baechu Prices Soar

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jeong] Last month, the producer price index, a leading indicator of consumer prices, rose for the seventh consecutive month due to increases in electricity, gas, water, waste, and services.

According to the Bank of Korea on the 25th, the producer price index for July was 120.47 (2015 = 100), up 0.3% from June (120.10), continuing the upward trend. Compared to the same month last year, it rose 9.2%, marking 20 consecutive months of increase.

The producer price index measures price changes of goods and services supplied by domestic producers to the market and is used as an economic trend indicator. The producer price index rose for 13 consecutive months until November last year, remained unchanged in December, and has been rising for seven consecutive months since January this year. However, the month-on-month growth rate has gradually decreased from 1.6% in April, 0.7% in May, 0.6% in June, to 0.3% in July.

Seo Jeong-seok, head of the price statistics team at the Bank of Korea, explained, "The July producer price index rose 0.3% month-on-month as electricity, gas, water, waste, and services increased, although manufactured goods declined."

Looking at the price index changes by sector, agricultural, forestry, and fishery products rose 4.1% month-on-month due to increases in agricultural products (11.9%) despite decreases in livestock products (-2.0%) and fishery products (-3.5%). Manufactured goods fell 0.6% month-on-month due to declines in coal and petroleum products (-3.6%) and primary metal products (-2.9%). Electricity, gas, water, and waste rose 3.9% month-on-month, driven by increases in electricity, gas, and steam (4.8%). Services increased 0.6% month-on-month, led by restaurant and accommodation services (1.3%) and transportation services (1.3%).

Among detailed items, agricultural products such as spinach (204.0%) and napa cabbage (47.0%) saw significant price increases. Service prices also rose, including hotels (16.4%), international air passengers (7.5%), movie theaters (4.2%), and construction heavy equipment rentals (10.5%).

The domestic supply price index, which measures price changes of goods and services supplied domestically, also rose for seven consecutive months. Raw materials (4.5%), intermediate goods (0.1%), and final goods (0.5%) all increased, resulting in a 0.7% month-on-month rise. Compared to the same month last year, it rose 14.7%, continuing an 18-month upward trend.