Due to Exchange Rate Rise... Import Prices Climb Again After One Month

June Import Prices Turn Up After a Month
Impact of Won-Dollar Exchange Rate Increase
Both Export and Import Prices Fall Excluding Exchange Rate Effect

The won-dollar exchange rate rose, causing import prices to turn upward again after a month. Import prices affect domestic consumer prices with a time lag.

According to the "June Export and Import Price Index and Trade Index (Provisional)" released by the Bank of Korea on the 16th, import prices (based on the Korean won) in June rose 0.7% compared to the previous month. Import prices had declined for the first time in five months in May (-1.3%) but turned upward this month.

The rise in import prices was due to the increase in the won-dollar exchange rate and the price hikes of chemical products and mineral products. The won-dollar exchange rate rose 1.1% from an average of 1,365.39 won in May to 1,380.13 won in June.

By item, raw materials centered on mineral products such as iron ore (16.1%) rose 0.6% compared to the previous month. Intermediate goods rose 0.8% due to increases in chemical products, computers, electronic and optical devices. Capital goods and consumer goods rose 0.5% and 0.7%, respectively, compared to the previous month.

Yoo Sung-wook, head of the Price Statistics Team at the Economic Statistics Bureau of the Bank of Korea, explained, "Import prices rose slightly due to the increase in the won-dollar exchange rate in June. Although international oil prices fell, the rise in international prices of intermediate goods such as naphtha also pushed import prices up."

Export prices (based on the Korean won) rose 0.9% compared to the previous month as the won-dollar exchange rate increased and prices of chemical products, computers, electronic and optical devices rose.

By item, agricultural, forestry, and fishery products rose 0.3% compared to the previous month. Manufactured goods rose 0.9% due to increases in chemical products, computers, electronic and optical devices. Among these, DRAM rose 55.9% year-on-year, and flash memory rose 139.6%.

Excluding the exchange rate effect, both import and export prices declined. Import prices based on contract currency excluding the exchange rate effect fell 0.2% compared to the previous month in June, and export prices fell 0.1%. Year-on-year, import prices rose 4.1%, and export prices rose 6.0%.

The June export volume index rose 2.6% year-on-year due to increases in computers, electronic and optical devices. The export value index rose 7.3% year-on-year. In contrast, the import volume index fell 9.0% year-on-year due to decreases in chemical products and transport equipment, and the import value index fell 7.7%.

The net barter terms of trade index rose 3.2% year-on-year, maintaining an upward trend for 12 consecutive months. This was because export prices (4.6%) rose more than import prices (1.4%). The income terms of trade index rose 5.9% compared to a year ago as both the export volume index and net barter terms of trade index increased.