Korea’s producer price index down for first time in four months in April

[Photo by Yonhap]

South Korea’s producer prices dropped for the first time in four months in April, driven by falling costs of agricultural products and lower city gas prices for industrial use.

According to data released by the Bank of Korea (BOK) on Thursday, the country’s producer price index (PPI), a key barometer of future inflation, reached 120.51 in April, down 0.1 percent from 120.59 in the previous month.

The index rose for three straight months from January to March before dropping in April.

Against a year-ago period, however, the index registered a moderate increase of 1.6 percent, the smallest year-on-year growth since January 2021.

The on-year increase in the index has been on a gradual decline for ten consecutive months since July last year when it reached its peak at 9.2 percent.

Agricultural, forestry, and fishery product prices fell 1.8 percent in April from a month earlier, data showed. Fishery product prices rose 2.3 percent and livestock product prices 1.1 percent, but agricultural product prices fell 5.5 percent on a rise in shipments of onions and green peppers.

Prices of industrial goods rose 0.2 percent in April from a month ago. Prices of computers, electronics, and optical devices fell 0.6 percent while those of primary metal products and chemical products rose 0.6 percent and 0.3 percent, respectively.

Prices of electricity, gas, water, and waste fell 2.8 percent on lower industrial-use city gas prices.

Prices of services rose 0.3 percent. Prices of transportation fell 0.5 percent while those of restaurants and accommodation gained 0.8 percent and insurance 0.8 percent.

“Given the lingering uncertainties surrounding major variables, including international oil prices and exchange rates, it remains challenging to make accurate predictions regarding producer price fluctuations,” said Seo Jung-seok, head of the BOK’s price statistics team.

“While household gas fees have increased since May 16, industrial gas prices are expected to decrease due to the downward trend in liquefied natural gas (LNG) prices,” the official said.

He added that factors influencing producer prices are characterized by a mix of upward and downward pressures.

The domestic supply price index, which measures price changes of goods including imported items, fell 0.2 percent in April compared to the previous month.