Oil Prices and Exchange Rates Rise, Import Prices Rebound After Three Months

International Oil Prices and Exchange Rates Rise Again
January Export and Import Price Indices Both Increase
Imports Up 2.2% and Exports Up 3.2% Compared to Previous Month

Import prices rebounded for the first time in three months due to the rise in international oil prices and the won-dollar exchange rate.

According to the 'January 2024 Export and Import Price Index (Provisional)' released by the Bank of Korea on the 16th, import prices last month increased by 2.2% compared to the previous month. Compared to the same month last year, they rose by 0.2%.

The import price index had risen for four consecutive months from July to October last year but showed a decline in November (-4.4%) and December (-1.7%) before rebounding again this year.

The rise in import prices was influenced by the increase in international oil prices and the won-dollar exchange rate. Dubai crude oil prices rose 2% from $77.33 per barrel in December last year to $78.85 in January this year. During the same period, the average won-dollar exchange rate increased by 1.5%, from 1,303.98 won to 1,323.57 won. The rise in oil prices was driven by China's economic stimulus announcements and heightened geopolitical risks in the Middle East and Europe, while the exchange rate reflected a retreat in expectations for an early interest rate cut in the U.S.

Import prices rose with raw materials up 3.5% and intermediate goods up 1.6%. Capital goods and consumer goods increased by 1.2% and 1.8%, respectively. Yuseong Wook, head of the price statistics team at the Bank of Korea, explained, "Raw materials rose mainly due to mining products (3.7%), and intermediate goods increased centered on computers, electronics, and optical equipment (3.7%) as well as coal and petroleum products (2.7%)."

The export price index also rose 3.2% month-on-month last month. Compared to the same month last year, it increased by 3.7%.

Export prices turned upward for the first time in three months along with import prices, driven by the rise in the won-dollar exchange rate and increases in computers, electronics, and optical equipment.

This was influenced by agricultural, forestry, and fishery products rising 0.4% from the previous month, and manufactured goods increasing by 3.2%. Among manufactured goods, computers, electronics, and optical equipment rose 7.4%, coal and petroleum products 4.2%, and chemical products 2.3%.

Looking at detailed items, DRAM rose 17% and system semiconductors increased 16.9% due to the recovery of the semiconductor market. Team leader Yoo explained, "Prices are rising due to increased demand for high-spec semiconductors and DRAM, as well as inventory adjustments by manufacturers. Notably, semiconductor prices have risen for six consecutive months compared to the previous month and have increased year-on-year for the first time in 19 months."

Import and export prices based on contract currency, which limits the exchange rate effect, rose 0.8% and 1.8% respectively compared to the previous month.