Producer Prices Rise 0.5% in October Due to Electricity and City Gas Rate Increases

[Asia Economy Reporter Seo So-jeong] Although agricultural product prices fell due to increased cultivation area and improved crop conditions, the producer price index rose by 0.5% last month as electricity and city gas prices increased to reflect costs.

According to the Bank of Korea on the 24th, the producer price index for October was 120.61 (2015=100), up 0.5% from September (120.06), continuing its upward trend for two consecutive months. Compared to the same month last year, it rose 7.3%, marking 23 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.

Seo Jeong-seok, head of the Price Statistics Team at the Bank of Korea’s Economic Statistics Bureau, explained, "The October producer price index rose 0.5% month-on-month due to increases in electricity and city gas charges. Compared to the same month last year, it rose 7.3%, with the upward trend slowing for four consecutive months since July, mainly due to a slowdown in the rise of manufactured goods such as petroleum, chemical products, and primary metal products."

Looking at the price index changes by sector, agricultural, forestry, and fishery products fell 7.3% month-on-month as aquatic products (1.5%) rose but agricultural products (-11.2%) and livestock products (-4.5%) declined. Manufactured goods rose 0.3% month-on-month as coal and petroleum products (1.9%) and food and beverages (0.4%) increased, despite chemical products (-0.2%) falling. Electricity, gas, water, and waste rose 8.1% month-on-month due to increases in electricity, gas, and steam (10.0%). Services rose 0.2% month-on-month with transportation services (0.6%) and restaurant and accommodation services (0.4%) increasing.

Among detailed items, prices of napa cabbage (-61.7%), spinach (-63.4%), pork (-10.6%), and beef (-8.6%) fell, while webfoot octopus (14.9%) rose. Among manufactured goods, prices of mixed seasonings (10.5%), kimchi (7.3%), naphtha (5.8%), and diesel (3.9%) increased, whereas prices of primary metal products such as galvanized steel sheets (-7.1%) and primary refined zinc (-6.6%) decreased. Services such as chartered buses (7.6%), hotels (4.8%), and road freight transport (2.5%) rose, while financial and insurance brokerage fees (-4.5%) declined.

By special classification, food fell 3.4%, and fresh food dropped 16.8%. Energy rose 6.4%, and items excluding food and energy increased 0.2%.

The domestic supply price index, which measures price changes of goods and services supplied domestically, rose 0.3% month-on-month. Raw materials (-1.6%) fell, but intermediate goods (0.7%) and final goods (0.3%) rose. The total output price index for October, which includes domestic shipments plus exports, rose 0.7%. Agricultural, forestry, and fishery products (-7.1%) declined, while manufactured goods (0.7%) and electricity, gas, water, and waste (8.1%) increased.