Bank of Korea 'June Producer Price Index (Provisional)'
Agricultural Products 6.6%↓ Seafood 0.8%↓
July Producer Prices May Rise
The producer price index fell for the first time in seven months as prices of agricultural products such as napa cabbage and Korean melon dropped and international oil prices declined. However, since the recent surge in vegetable and fruit prices due to heavy rains has not yet been reflected, there is a possibility that the producer price index will rise again next month.
According to the "June 2024 Producer Price Index (Provisional)" released by the Bank of Korea on the 23rd, the producer price index in June fell 0.1% from the previous month, marking a decline after seven months. Compared to the same month last year, it rose 2.5%, continuing an 11-month streak of increases.
The decline in the producer price index is mainly due to a clear downward trend in agricultural, forestry, and fishery products. Agricultural, forestry, and fishery products fell 2.8% from the previous month, with agricultural products down 6.6% and fishery products down 0.8%. Napa cabbage prices dropped 45.3% month-on-month, and Korean melon prices fell 28.1%. However, apples (71%) and pears (199.7%) maintained high levels compared to the same month last year.
Yoo Seong-wook, head of the Price Statistics Team at the Bank of Korea’s Economic Statistics Bureau, said, "The sharp rise in vegetable and fruit prices caused by heavy rains is expected to be reflected in July. While the extent and magnitude of this reflection need to be observed, if adverse weather conditions persist, there is a factor that could push producer prices up."
Lower international oil prices also contributed to the decline in producer prices. Manufactured goods saw food and beverages rise 0.2%, but coal and petroleum products fell 0.1%, resulting in a flat month-on-month change. Gasoline prices fell 4.4% and jet fuel prices dropped 6.1% compared to the previous month. Compared to the same month last year, naphtha rose 34.6% and diesel increased 10%.
Yoo explained, "The increase in production of Korean melon, a seasonal fruit, led to a drop in agricultural product prices. Although the decline in international oil prices also contributed to the fall in producer prices, the impact of the decrease in agricultural product prices was relatively greater."
Services rose 0.1% month-on-month, with restaurant and accommodation services up 0.3% and real estate services up 0.1%. Electricity, gas, water, and waste services fell 0.1% due to a 2.9% drop in industrial city gas prices.
By special classification, food products fell 1.1% month-on-month, and fresh food dropped 7.4%. Energy declined 0.6%, and IT remained flat compared to the previous month. Excluding food products and energy, prices rose 0.1% month-on-month.
The domestic supply price index, which combines the producer price index and import price index, was flat month-on-month as raw materials fell 1.6%, but intermediate goods rose 0.2% and final goods increased 0.1%.
The total output price index, combining the producer price index and export price index, rose 0.2% month-on-month as agricultural, forestry, and fishery products fell 2.6%, but manufactured goods increased 0.4%.
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