February Producer Prices Fall... Coal and Petroleum Products Down 7.2% Due to Corona-Driven Oil Price Plunge

Lettuce Consumption Down 60.6%, Eggs Down 13.2% Due to Reduced School Meals and Other Consumption

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Eunbyul Kim] In February, the producer price index fell by 0.3% compared to the previous month due to decreased demand caused by the spread of the novel coronavirus infection (COVID-19) and a sharp drop in international oil prices. In particular, the prices of agricultural, forestry, and fishery products as well as coal and petroleum products showed a noticeable decline.

According to the 'February 2020 Producer Price Index' released by the Bank of Korea on the 20th, the overall producer price index last month was 103.74, down 0.3% from the previous month. Compared to the same month last year, it rose by 0.7%.

With the sharp drop in international oil prices, prices of coal and petroleum products such as diesel (-11.4%) and naphtha (-10.9%) fell by 7.2%. Chemical products also declined by 0.4%. The overall price of manufactured goods fell by 0.5% influenced by the plunge in oil prices. In February, international oil prices based on Dubai crude fell by 15.7%.

On the other hand, prices of computers, electronic, and optical equipment rose by 0.9%, which helped reduce the overall decline in manufactured goods prices. Concerns about production disruptions due to the spread of COVID-19 led to a 2.8% increase in DRAM prices. Liquid Crystal Displays (LCD) for TVs also rose by 4.3%.

As consumption sharply decreased, demand for agricultural, forestry, and fishery products also declined, naturally leading to a drop in related prices. Prices of eggs (-13.2%), beef (-2.1%), lettuce (-60.6%), and radish (-51.0%) all plunged simultaneously. A Bank of Korea official explained, "With school openings postponed, demand for school meals decreased, causing prices of eggs and radishes to fall." The price of agricultural, livestock, and fishery products combined fell by 3.1% compared to the previous month.

The anticipated impacts on restaurants and lodging (-0.1%) and transportation (-0.2%) also became visible. Prices in the lodging industry, such as vacation condos (-9.5%) and hotels (-3.8%), declined, and transportation prices, including international air passenger fares (-2.9%), also fell. However, service prices remained at the same level as last month due to a 2.2% rise in automobile insurance prices and a 4.8% increase in residential real estate management fees.

The domestic supply price index, which measures price changes including imported goods, rose by 0.3% from the previous month and 1.6% compared to the same month last year. The domestic supply price index increased mainly due to intermediate goods (0.3%).

The total output price index, which measures domestic shipments plus exports, rose by 0.2% from the previous month and 0.3% compared to the same month last year.

This content was produced with the assistance of AI translation services.