Seoul: South Korea's producer prices experienced a decrease in August for the first time in three months, primarily attributed to a significant reduction in mobile phone charges after a data breach led a major carrier to offer discounts, as reported by central bank data.
According to Yonhap News Agency, the Bank of Korea (BOK) released preliminary data indicating that the producer price index (PPI), an essential measure of consumer inflation, decreased by 0.1 percent in August compared to the previous month, reaching 120.12. This marks the first month-on-month decline since May, following increases of 0.1 percent in June and 0.4 percent in July.
Despite the monthly decline, producer prices saw a 0.5 percent increase in August from the previous year, continuing a 25-month streak of on-year growth. Agricultural and livestock product prices increased by 3.4 percent from July, driven by a constrained supply due to adverse weather conditions. Conversely, coal and petroleum product prices saw a decline of 1.1 percent.
Service prices fell by 0.4 percent, largely influenced by a 26.2 percent decrease in telecommunications services. SK Telecom's implementation of a 50 percent discount on August bills for over 20 million users, following a data breach incident, significantly contributed to this decline. Lee Moon-hee, a BOK official, noted in a press briefing that excluding the impact of telecommunications service price cuts, producer prices would have risen by an estimated 0.2 percent month-on-month.
Producer prices play a crucial role in shaping inflation trends, as they affect the prices businesses charge consumers in the future. The domestic supply price index, which includes both producer and import prices, rose by 0.2 percent month-on-month in August due to increasing raw material costs, according to the data.
In August, consumer prices, a primary indicator of inflation, increased by 1.7 percent year-on-year, marking the slowest growth rate in nine months.