Producer Prices Rise for First Time in Three Months... Cabbage Up 31.1%, Pork Up 9.5%

Producer Price Index Rises for First Time in Three Months
Driven by Higher International Oil Prices and Increases in Agricultural and Livestock Product Prices

The producer price index turned upward for the first time in three months. This was due to the rise in international oil prices, as well as increases in the prices of agricultural and livestock products.

According to the "June 2025 Producer Price Index (provisional)" released by the Bank of Korea on July 22, last month's producer price index stood at 119.77 (2020=100), up 0.1% from the previous month. The index returned to positive territory for the first time in three months, driven by increases in livestock products and services. Compared to the same period last year, it rose by 0.5%.

By item, prices of agricultural, forestry, and fishery products rose by 0.6% from the previous month, with livestock products up 2.4% and agricultural products up 1.5%. This is the highest level in five months since the 4.4% increase in January. Among livestock products, pork prices jumped 9.5% from the previous month due to a decrease in slaughter volume, and egg prices rose 4.4% due to supply shortages relative to demand. For agricultural products, cabbage and rice prices climbed by 31.1% and 3.4%, respectively, from the previous month due to reduced supply. Lee Moonhee, head of the Price Statistics Team 1 at the Bank of Korea's Economic Statistics Department, explained, "The poor harvest as spring cabbage shipments entered their later stage had an impact."

Among industrial products, while prices of computers, electronics, and optical devices fell by 0.6%, prices of coal and petroleum products rose by 1.2%, resulting in no overall change from the previous month. Electricity, gas, water, and waste management prices fell by 0.1% from the previous month, mainly due to a 2.4% decrease in industrial city gas prices. Service prices rose by 0.3% from the previous month, with financial and insurance services up 2.5% and real estate services up 0.2%.

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 fresh foods fell by 1.4% from the previous month. Energy, which includes petroleum products, rose by 0.2%. IT products fell by 0.2% from the previous month. Prices of items excluding food and energy rose by 0.1% from the previous month.

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There is significant uncertainty regarding the direction of the producer price index this month. Lee pointed out, "There was a heat wave in early July, and recently there have been heavy rains, so there is considerable uncertainty regarding the prices of agricultural, forestry, and fishery products." So far this month, the average monthly international oil price (Dubai crude) and the won-dollar exchange rate have both risen slightly from the previous month. Lee added, "The increase in international oil prices in June (8.7% for Dubai crude) will also have an impact in July with a time lag," and "External factors such as tariff negotiations are also uncertain, so we need to monitor changes closely." However, he noted that the reduction in residential electricity and industrial city gas rates in July is expected to act as a downward factor.

Last month, domestic supply prices fell by 0.6% from the previous month. Compared to the same month last year, they dropped by 1.6%. The domestic supply price index measures price changes of goods and services supplied domestically (including both domestic shipments and imports) to track the transmission of price fluctuations. By stage of production, prices of raw materials (-4.1%), intermediate goods (-0.3%), and final goods (-0.1%) all declined.

The total output price index, which measures price changes for goods and services based on total output (including exports as well as domestic shipments) to capture overall price fluctuations of domestically produced goods, fell by 0.3% from the previous month. While service prices rose by 0.2%, prices of industrial products and others fell by 0.5%. Compared to the same month last year, the index dropped by 0.6%.