Producer Prices Fall for Second Month... Oriental Melons and Onions Halved from Previous Month

Producer Price Index Down 0.4% from Previous Month
Agricultural Products Continue to Decline Due to Increased Shipments
Coal and Petroleum Products Fall as International Oil Prices Drop

The producer price index has declined for the second consecutive month. This result was driven by a continued decrease in agricultural products due to increased shipments, as well as a drop in international oil prices, which also led to lower prices for coal and petroleum products. However, analysts note that it is necessary to monitor the direction going forward, as international oil prices are currently rising due to instability in the Middle East, and there are also variables in the volume of agricultural product shipments due to weather factors such as the monsoon season.

According to the "Provisional Producer Price Index for May 2025" released by the Bank of Korea on the 20th, last month's producer price index stood at 119.66 (2020=100), down 0.4% from the previous month. This marks the second consecutive month of decline, as agricultural products, coal, and petroleum products all fell. Compared to the same period last year, agricultural products and manufactured goods decreased, but industrial electricity, restaurant, and accommodation services rose, resulting in a 0.3% increase in the May producer price index year-on-year.

By item, agricultural, forestry, and fishery products fell by 4.4% from the previous month, as agricultural products (-10.1%) and fishery products (-1.4%) both declined. Due to increased shipments, oriental melons plummeted by 53.1% from the previous month, while onions dropped by 42.7%. Manufactured goods saw food and beverage products rise by 0.6%, but coal and petroleum products fell by 4.2% due to lower international oil prices, resulting in a 0.6% decrease from the previous month. Electricity, gas, steam, and waste management fell by 0.6% from the previous month, mainly due to a 7.7% drop in industrial city gas. Services increased by 0.2% from the previous month, as financial and insurance services rose by 1.1%, and restaurant and accommodation services increased by 0.4%.

By special classification, food products, including edible agricultural, forestry, and fishery products and processed foods, fell by 1.7% from the previous month, while energy, including petroleum products, declined by 1.6%. Items excluding food and energy fell by 0.2% from the previous month.

Analysts say it remains to be seen whether the producer price index will continue to decline this month. Lee Moonhee, head of the Price Statistics Team at the Economic Statistics Department of the Bank of Korea, said, "International oil prices have risen compared to last month, but the won-dollar exchange rate has adjusted, so the directions are different. There is significant uncertainty due to geopolitical risks in the Middle East, and agricultural product prices could also become more volatile depending on the monsoon, so we need to keep an eye on developments." He also explained that movements in public utility rates are another variable.

On the 10th, ramen was displayed at a large supermarket in Seoul.

Last month, domestic supply prices fell by 1.4% from the previous month, as both domestic shipments and imports declined. Compared to the same month last year, domestic supply prices fell by 1.0%. The domestic supply price index measures price changes of goods and services supplied domestically (through domestic shipments and imports) to track the transmission of price fluctuations. By stage of production, raw materials fell by 5.6% from the previous month, mainly due to a 6.4% drop in imports such as crude oil, and intermediate goods declined by 1.1%. Final goods saw services rise by 0.2%, but consumer goods and capital goods both fell by 1.4%, resulting in a 0.7% decrease overall. Compared to the same month last year, final goods rose, but raw materials and intermediate goods, mainly imports, fell by 1.0%.

The total output price index, which measures price changes in goods and services based on total output (including exports in addition to domestic shipments) to capture overall price fluctuations of domestic products, fell by 1.1% from the previous month, as both domestic shipments and exports declined. By item, services rose by 0.2%, but manufactured goods fell by 1.7%, and agricultural, forestry, and fishery products dropped by 4.4%. Compared to the same month last year, manufactured goods and agricultural, forestry, and fishery products fell by 0.2%.