Producer Price Index Stagnant for Second Month... Supports Consumer Price Stability

Bank of Korea Releases "March 2025 Producer Price Index (Provisional)"
Flat for Second Consecutive Month: Primary Metal Products Up, Coal and Petroleum Products Down
Focus on Consumer Price Stabilization... Attention on Service Sector Trends with Significant Impact on Domestic Demand

The producer price index remained flat for the second consecutive month. While prices for primary metal products increased, coal and petroleum products declined due to falling international oil prices, resulting in this outcome. This month as well, downward pressure remains high due to the continued decline in oil prices, so the producer price index is expected to act as a stabilizing factor for the consumer price index, which typically lags behind with a time delay.

According to the "March 2025 Producer Price Index (provisional)" released by the Bank of Korea on the 22nd, last month’s producer price index was unchanged (0.0%) from the previous month. This marks a second consecutive month of no change. After a 0.1% decline in October last year, the index rose by 0.1% in November, 0.4% in December, and continued to increase by 0.6% in January this year, but remained at 0.0% in both February and March.

The main reason was that both manufactured goods and services, which have high weights in the index, remained flat. Lee Moonhee, head of the Price Statistics Team at the Economic Statistics Department 1 of the Bank of Korea, explained, "Although prices for primary metal products (0.8%) increased, coal and petroleum products (-4.3%) declined due to the impact of falling international oil prices, resulting in an overall flat outcome compared to the previous month."

For services, financial and insurance services (-1.5%) declined, but restaurant and accommodation services (0.5%) increased, so the overall service sector also remained flat compared to the previous month.

In addition, agricultural, forestry, and fishery products rose by 0.4% from the previous month, as agricultural products (-0.6%) fell but livestock products (1.8%) and fishery products (0.5%) increased. Electricity, gas, water, and waste declined by 0.2% from the previous month, as industrial city gas (-2.7%) and steam (-1.1%) prices fell. Compared to the same month last year, the index rose by 1.3%. Although agricultural products decreased, industrial electricity, information and communication, and broadcasting services increased.

By special classification, food products, which include edible agricultural, forestry, and fishery products and processed foods, rose by 0.4% from the previous month, while energy, which includes petroleum products, fell by 1.4%. Items excluding food and energy increased by 0.1% from the previous month.

The producer price index for April is also under downward pressure due to the continued decline in international oil prices, increasing the likelihood that the consumer price index, which lags behind the producer price index, will stabilize in the future. The producer price index is reflected in final consumer prices with a time lag and is considered a leading indicator for consumer prices. However, analysts note that it is also important to monitor the movements of services and public utility rates, which have a significant impact on domestic demand, to assess future trends.

Meanwhile, the domestic supply price index, which measures price fluctuations including imported goods, rose by 0.1% from the previous month. By stage of production, raw materials, mainly due to imports such as crude oil, fell by 1.0%, but intermediate goods (0.1%) and final goods (0.3%) increased. Compared to the same month last year, prices for raw materials, intermediate goods, and final goods all rose, resulting in a 2.3% increase.

To gauge overall price changes for domestic products, the total output price index?which measures price fluctuations for goods and services based on total output, including exports as well as domestic shipments?rose by 0.1% from the previous month due to an increase in exports last month. Agricultural, forestry, and fishery products (0.4%) and manufactured goods (0.2%) also increased. Compared to the same month last year, the index rose by 2.5%.