Import Prices Fall for Fifth Consecutive Month... Supporting Consumer Price Stability

Import Prices Fall 0.6% in June Compared to Previous Month
Average Won-Dollar Exchange Rate at 1,366.95 Won... Down 2.0% from May
Continued Decline in Import Prices Limits Upward Pressure on Consumer Prices

Import prices have declined for the fifth consecutive month. Despite the rise in international oil prices, the continued depreciation of the won against the US dollar over the past five months has contributed to this downward trend. This is expected to exert downward pressure on consumer prices, which have recently been hovering above 2%.

According to the "Export and Import Price Index and Trade Index (Preliminary) for June 2025," released by the Bank of Korea on the 16th, last month's import prices (in won terms) fell by 0.6% compared to the previous month. On a year-on-year basis, they dropped by 6.2%. Although international oil prices rose, the decline in the won-dollar exchange rate led to this result. Last month, the average monthly price of Dubai crude oil was $69.26 per barrel, up $5.53 (8.7%) from $63.73 in May. In contrast, the average won-dollar exchange rate fell by 2.0%, from 1,394.49 won in May to 1,366.95 won last month.

By usage, raw materials, mainly mineral products such as crude oil, rose by 1.5% compared to the previous month. Intermediate goods fell by 1.6% month-on-month, as prices for chemical products and computers, electronics, and optical devices declined. Capital goods decreased by 1.1% from the previous month, and consumer goods fell by 1.0%. Excluding exchange rate effects, import prices in contract currency terms rose by 1.2% compared to the previous month. On a year-on-year basis, they fell by 6.1%.

The continued decline in import prices for five consecutive months is expected to limit upward pressure on consumer prices. Import prices are typically reflected in consumer prices with a lag of one to three months. However, it remains uncertain whether the downward trend in import prices will continue this month. Lee Moonhee, head of the Price Statistics Team at the Economic Statistics Department 1 of the Bank of Korea, stated, "In July, the price of Dubai crude oil has risen by about 1% compared to the previous month, and the won-dollar exchange rate has remained almost unchanged, falling by just 0.1% from the previous month. Given the current situation, the impact of oil prices and the exchange rate does not appear to be significant. However, considering the high level of uncertainty in both domestic and international conditions, it is necessary to continue monitoring the situation."

Donald Trump, President of the United States, announced that starting August 1, a 25% reciprocal tariff will be imposed on all imports from Korea. On the 8th, cars awaiting shipment were lined up at the export yard at Pyeongtaek Port, Gyeonggi Province, ready for export.

Last month, export prices fell by 1.1% compared to the previous month, as chemical products, computers, electronics, and optical devices declined due to the impact of the falling won-dollar exchange rate. On a year-on-year basis, export prices dropped by 4.5%. By item, agricultural, forestry, and fishery products fell by 1.8% from the previous month. Manufactured goods, led by chemical products, computers, electronics, and optical devices, fell by 1.1% month-on-month. In contract currency terms, export prices rose by 0.7% compared to the previous month. On a year-on-year basis, they fell by 4.1%.

The export volume index, which shows changes in export and import activity, rose by 6.8% in June compared to the same month last year, driven by increases in computers, electronics, and optical devices. The export value index rose by 2.8%. During the same period, the import volume index rose by 11.2% as computers, electronics, optical devices, machinery, and equipment increased. The import value index rose by 2.9%.

The net barter terms of trade index for June rose by 4.0% year-on-year, as import prices (-7.4%) fell more sharply than export prices (-3.7%). The income terms of trade index increased by 11.0%, as both the net barter terms of trade index (4.0%) and the export volume index (6.8%) rose.