Seoul: South Korea's producer prices experienced their most significant increase in over a year last month, driven by rising global oil prices and a weaker local currency, as indicated by data from the central bank on Thursday.
According to Yonhap News Agency, the producer price index-a crucial indicator of consumer inflation-rose 0.6 percent in January compared to the previous month. This marks an acceleration from a 0.4 percent increase in December, based on preliminary data from the Bank of Korea (BOK). The January increase is the largest since August 2023, when the index rose by 0.8 percent month-on-month, and it signifies the third consecutive month of price hikes.
On an annual basis, the index saw a 1.7 percent rise last month, marking the 18th consecutive month of year-on-year increases. Producer prices are key for predicting inflation trends, as they affect the prices businesses will charge consumers in the coming months.
The growth in prices coincided with a 9.8 percent increase in the average price of Dubai crude-South Korea's benchmark-reaching US$80.41 per barrel in January. Additionally, the Korean won depreciated to 1,455.79 won per U.S. dollar in January from 1,434.42 won the previous month, marking a 10 percent decline from the previous year.
In more detail, prices for agricultural, livestock, and fisheries goods rose by 4 percent from the previous month due to poor harvests and increased demand. Industrial product prices increased by 0.6 percent, while costs for electricity, gas, and other utilities remained stable. Service prices also saw an increase of 0.4 percent.
The domestic supply price index, which considers both produce and import prices, rose by 0.6 percent month-on-month in January. A BOK official noted that the impact of producer prices on consumer inflation can vary depending on corporate pricing strategies and other factors. The official added that although oil prices have decreased and the local currency has appreciated somewhat this month, volatility is anticipated.
Consumer prices, a primary measure of inflation, also rose by the largest margin in six months, showing a 2.2 percent year-on-year increase in January, according to government data.