Producer Prices Fall 0.3% in August Due to International Oil Price Drop... First Decline in 1 Year and 10 Months

[Asia Economy Reporter Seo So-jeong] Last month, influenced by the decline in international oil prices, prices of manufactured goods such as coal and petroleum products, and chemical products fell, causing the producer price index, a leading indicator of consumer prices, to turn downward for the first time in 1 year and 10 months.

According to the Bank of Korea on the 23rd, the producer price index for August was 120.12 (2015=100 base), down 0.3% from July (120.44), marking a downward trend. Compared to the same month last year, it rose 8.4%, showing an increase for 21 consecutive months.

The producer price index measures the price changes of goods and services supplied by domestic producers to the market and is used as an economic trend indicator.

Looking at the price index changes by sector, agricultural, forestry, and fishery products saw a slight decline in fishery products (-0.5%), but agricultural products (3.8%) and livestock products (2.1%) rose, resulting in a 2.5% increase compared to the previous month. Manufactured goods fell 1.4% month-on-month due to decreases in coal and petroleum products (-8.6%) and chemical products (-2.4%).

Electricity, gas, water, and waste services rose 3.6% month-on-month, mainly driven by city gas (14.1%). Services increased 0.3% month-on-month, with rises in restaurant and accommodation services (0.9%) and financial and insurance services (0.9%).

Among detailed items, agricultural products such as cabbage (32.1%) and spinach (31.9%) saw significant increases. Service prices also rose, including domestic air passengers (11.4%) and hamburger and pizza specialty stores (4.4%). Items that declined included hairtail fish (-31.2%), squid (-13.4%), benzene (-14.1%), diesel (-8.2%), and mobile phones (-3.3%).

The domestic supply price index, which measures price changes of goods and services supplied domestically, fell 1.0% month-on-month. This is the first decline in 1 year and 9 months since November 2020 (-0.2%). Raw materials (-5.8%), intermediate goods (-0.7%), and final goods (-0.1%) all decreased. Compared to the same month last year, it rose 12.3%, continuing an upward trend for 19 consecutive months.

The total output price index for August, which adds exports to domestic shipments, fell 0.6% month-on-month, marking a decline for the first time in 8 months since December last year (-0.2%).