Korea’s PPI down 0.2% in Nov. on falling costs of farm, oil goods

[Photo by Han Joo-hyung]

South Korea’s producer price index (PPI), a key barometer of future inflation, dropped for the first time in November after rising for two months in a row, driven by sharply falling costs of agricultural goods and crude oil.

According to data released by the Bank of Korea (BOK) on Thursday, the country’s PPI, which measures changes in the price of goods and services produced in the domestic market with a base set at 2015, reached 120.42 in November, down 0.2 percent from a month ago.

It is the first time in three months that the index headed back south after two months of rise in September (0.1 percent) and October (0.5 percent).

Against a year-ago period, the PPI jumped 6.3 percent to rise for 24 straight months.

The increase slowed for a fifth month in a row - 10.0 percent in June, 9.2 percent in July, 8.2 percent in August, 7.9 percent in September, 7.3 percent in October, and 6.3 percent in November.

[Photo by Yonhap]

Agricultural, forestry, and fishery product prices were down 3.2 percent in November from a month earlier, data showed. Fishery product prices rose 4.1 percent, but agricultural and livestock product prices fell 7.8 percent and 0.6 percent each.

“There was more output of agricultural goods such as cabbage and radish in an improved weather condition,” said Seo Jung-seok, an official from BOK. “Prices of rice are also falling due to reduced consumption and increased stock.”

Prices of livestock products fell along with the increasing number of raised animals for pork and beef and more imports, Seo added.

Prices of industrial goods fell 0.2 percent on month in November. Prices of chemical products fell 0.9 percent on lower crude oil price and sluggish demand amid concerns about the weak economy. Coal and petroleum product prices also fell 1.0 percent.

Prices of electricity, gas, water, and waste fell 0.1 percent in November from a month earlier on lower city gas prices for industrial use in November.

Prices of services remained unchanged from a month earlier in November. Prices of financial and insurance services rose 1.3 percent while transportation services fell 0.3 percent.

The domestic supply price index, which measures price fluctuations of goods including imported items, fell 1.5 percent on month amid a decline in raw materials prices (4.7 percent), intermediate goods (1.1 percent), and final goods (1.2 percent).

The total output price index that includes exports and domestic shipments was down 1.7 percent on month in November.