Import Price Index Rises 3.3% in September Due to Exchange Rate Increase... Uptrend Resumes After Three Months

[Asia Economy Reporter Seo So-jeong] The import price index turned to an upward trend after three months due to the rise in the won-dollar exchange rate. Compared to last year, import prices increased by more than 20%, still showing a high level.

According to the Bank of Korea on the 14th, the September import price index (provisional figure based on the won, 2015 level 100) rose 3.3% from the previous month to 154.38. Import prices had declined for two consecutive months in July and August but returned to an upward trend.

Although international oil prices fell, mining products, computers, electronics, and optical devices rose due to the increase in the won-dollar exchange rate. The monthly average Dubai crude oil price dropped 5.9% from $96.63 per barrel in August to $90.95 last month.

The average won-dollar exchange rate last month was 1,391.59 won, up 5.5% from the previous month. In fact, import prices based on contract currency, which limits the exchange rate effect, fell 1.4% compared to the previous month.

By item, natural gas (LNG, 13.7%), bags (10.2%), system semiconductors (8.7%), paint (7.6%), wheat (7.2%), and electronic measuring instruments (5.3%) increased, while naphtha (-4.5%), bunker C oil (-2.3%), and crude oil (-0.7%) decreased.

The export price index last month was 131.74, rising 3.2% from the previous month, turning to an upward trend after three months. Despite the decline in international oil prices and semiconductor prices, the sharp rise in the exchange rate caused the increase. Export prices based on contract currency, which limits the exchange rate effect, fell 1.7% compared to the previous month.

Agricultural, forestry, and fishery products rose 3.2% from the previous month, and manufactured goods saw a decline in coal and petroleum products, but chemical products, computers, electronics, optical devices, and transportation equipment increased, raising the export price index.

By item, engineering plastic resin (10.7%), xylene (5.7%), synthetic fiber fabrics (5.6%), system semiconductors (5.5%), industrial dryers (5.5%), and RV automobiles (5.2%) increased.

The import price index rose 24.1% compared to the same month last year, marking 19 consecutive months of increase, and the export price index rose 15.2%, marking 20 consecutive months of increase.

Seo Jeong-seok, head of the price statistics team at the Bank of Korea, said, "Although semiconductor prices fell based on contract currency, the won-dollar exchange rate surged, causing prices to rise in won terms," adding, "In October, due to increased uncertainty in external conditions, it is difficult to make a definitive forecast on the factors affecting import price fluctuations."