August Import Prices Rise 4.4%... Largest Increase in 1 Year and 5 Months Due to International Oil Price Surge

Export Price Index Also Rises 4.2%

Last month, import prices rose at the fastest pace in 1 year and 5 months due to the increase in international oil prices. Since import prices are reflected in consumer prices with a lag of 1 to 3 months, they are expected to exert upward pressure on inflation going forward.

According to the "August Export and Import Price Index" released by the Bank of Korea on the 13th, the import price index (based on the Korean won) rose 4.4% month-on-month last month, marking the largest increase since March last year (7.6%). This was due to the rise in mining products, coal, and petroleum products influenced by the increase in international oil prices. Compared to the same month last year, it fell 9.0%, continuing the downward trend. The average monthly price of Dubai crude oil rose 7.5% from $80.45 per barrel in July to $86.46 last month. Compared to the same month last year, it fell 10.5%.

Raw materials, centered on mining products, rose 7.2% from the previous month, while intermediate goods increased 3.7% month-on-month due to rises in coal and petroleum products (13.7%) and chemical products (1.8%). Capital goods and consumer goods rose 1.6% and 1.9%, respectively, compared to the previous month.

Import prices based on contract currency, which limits the effect of exchange rates, rose 2.2% from the previous month. The average won-dollar exchange rate last month was 1,318.47 won, up 2.5% from 1,286.30 won in the previous month.

Yoo Sung-wook, head of the Price Statistics Team at the Bank of Korea's Economic Statistics Bureau, said, "International oil prices rose due to production cuts by oil-producing countries, causing significant increases in mining products, coal, and petroleum products. Generally, import prices affect consumer prices with a lag of 1 to 3 months, but the impact can vary depending on government price stabilization policies and the magnitude and speed of price increases by companies."

The export price index (based on the Korean won) rose 4.2% month-on-month, marking an increase for two consecutive months. The export price index had declined in May and June but rose in July after three months and continued to rise this month. Compared to the same month last year, it fell 7.9%, maintaining the downward trend.

By item, manufactured goods rose 4.2% month-on-month, mainly due to coal and petroleum products (15.4%) and chemical products (3.9%). Agricultural, forestry, and fishery products fell 1.0% compared to the previous month.

Yoo explained, "August export prices rose sharply month-on-month as the won-dollar exchange rate increased and coal, petroleum products, and chemical products rose."

Export prices based on contract currency, which limits the effect of exchange rates, rose 1.9% from the previous month.