Will Inflation Risk Increase... Import Prices Rising for Three Consecutive Months Amid Soaring Oil Prices

Bank of Korea's 'September Export and Import Price Index'
Export Price Index Rises 1.7% MoM Due to Exchange Rate Increase

International oil prices rose, causing import prices to increase for the third consecutive month. Since import prices affect consumer prices with a lag of 1 to 3 months, this becomes a factor that will drive prices up in the future.

According to the 'September Export and Import Price Index' released by the Bank of Korea on the 17th, the import price index (based on the Korean won) rose 2.9% from the previous month. This was due to the rise in mining products and coal and petroleum products influenced by the increase in international oil prices. Compared to the same month last year, it fell 9.6%, continuing a downward trend for eight consecutive months. The average monthly price of Dubai crude oil rose 7.9% from $86.46 per barrel in August to $93.25 in September. Compared to the same month last year, it increased by 2.5%.

Compared to the previous month, raw materials rose 5.7%, mainly in mining products, while intermediate goods increased 2%, led by coal and petroleum products (7.9%) and chemical products (2.1%). Capital goods and consumer goods each rose 0.7%.

The import price index based on contract currency, which limits the effect of exchange rates, rose 2.3% from the previous month but fell 5.8% compared to the same month last year. The average won-dollar exchange rate last month was 1,329.47 won, up 0.8% from 1,318.47 won in the previous month.

International oil prices have been under increasing upward pressure due to production cuts by oil-producing countries such as Saudi Arabia and the outbreak of war between Israel and the Palestinian armed group Hamas, making it highly likely to push import prices up in the future. Seongwook Yoo, head of the Price Statistics Team at the Bank of Korea’s Economic Statistics Bureau, explained, "Oil prices have been fluctuating since the outbreak of the war, and for now, we need to monitor the trend."

The won-dollar exchange rate rise also caused the export price index (based on the Korean won) to increase 1.7% from the previous month. The export price index, along with the import price index, showed a downward trend in May and June but rose in July for the first time in three months and has been rising for three consecutive months.

By item, agricultural, forestry, and fishery products fell 1.3% from the previous month. Manufactured goods rose 1.7% from the previous month, mainly due to coal and petroleum products (5.7%) and chemical products (2.8%).

The export price index based on contract currency, which limits the effect of exchange rates, rose 1.1% from the previous month but fell 4.9% compared to the same month last year.