Producer Prices Fall in March... Service Prices Turn Down Due to Hits on Aviation and Finance Sectors

Bank of Korea 'March Producer Price Index'

[Image source=Yonhap News]

[Asia Economy Reporter Eunbyeol Kim] As international oil prices declined, producer prices fell last month, mainly in manufactured goods. This marks the second consecutive month of decline compared to the previous month. With prices for air transportation, financial, and insurance services also falling, service prices turned downward compared to the previous month.

According to the "March Producer Price Index" released by the Bank of Korea on the 22nd, the producer price index last month was 102.89 (2015=100), down 0.8% from the previous month. Compared to the same month last year, it fell by 0.5%. This is a reversal to a decline after three consecutive months of increase.

The decline in international oil prices had a significant impact on the prices of coal and petroleum products (-19.9%) and chemical products (-1.2%). Due to the drop in oil prices, the price of manufactured goods fell 1.4% compared to the previous month.

However, semiconductor prices showed a favorable trend until March. Semiconductor prices rose 2.4% from the previous month, while they fell 1.5% compared to the same month last year. DRAM prices increased 3.1% month-on-month. Kang Hwan-gu, head of the price statistics team at the Bank of Korea, explained, "The decline in semiconductor prices also slowed compared to the same month last year."

In March, due to the impact of the novel coronavirus disease (COVID-19), sectors such as air transportation and finance were hit, causing service prices to turn downward compared to the previous month. Prices for financial and insurance services (-2.9%) fell, and transportation (-0.6%) was also affected. By detailed item, domestic air passenger prices dropped 11.0%, and resort condominium prices also fell 10.7%. Brokerage fees in finance and insurance decreased 15.4% month-on-month.

Team leader Kang explained, "In March, stock prices fell, leading to a drop in fees, which affected the financial sector, and the declines in food, lodging, and transportation were significant."

However, prices for agricultural, forestry, and fishery products rose 1.2% compared to the previous month. In February, prices for these products fell due to the impact of COVID-19, but in March, prices for livestock and seafood showed signs of recovery.

The domestic supply price index, which measures price changes including imported goods, fell 1.0% month-on-month and 0.2% year-on-year.

The total output price index, which measures domestic shipments plus exports, fell 0.7% month-on-month and 0.8% year-on-year.

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