Producer Prices Rise for 5 Consecutive Months Due to Strong Oil Prices... Gasoline Up 13% (Comprehensive)

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] Due to the rise in international oil prices, producer prices, mainly for manufactured goods, have increased for the fifth consecutive month.

According to the Bank of Korea on the 21st, the Producer Price Index (PPI) for March was 106.85 (2015 level 100), up 0.9% from February's 105.91. The index has maintained an upward trend for five consecutive months from November last year through March.

Looking at the month-on-month rate of change by item, prices of manufactured goods rose 1.6% due to the impact of international oil prices. In particular, prices of coal and petroleum products such as diesel (10.8%), gasoline (12.8%), and naphtha (7.0%) surged.

The producer price of the service sector also increased by 0.1% compared to February. The largest increase was seen in the food service and accommodation sector (0.5%).

Agricultural, forestry, and fishery products, which led price increases last winter, fell by 0.1%. Agricultural products dropped by 2.1%, but prices of livestock products (1.3%) and fishery products (3.4%) have not yet stabilized. By item, prices of green chili peppers (-36.5%) and strawberries (-25.9%) decreased, while pork (11.9%), anchovies (26.1%), and croaker fish (28.4%) rose significantly.

The Domestic Supply Price Index, which measures price changes including imported goods, also rose 1.8% month-on-month. The Total Output Price Index for March, which adds export goods to domestic shipments, increased by 1.5% compared to February.

Kim Younghwan, head of the Price Statistics Team at the Bank of Korea’s Economic Statistics Bureau, said, "The Producer Price Index affects the Consumer Price Index with a lag of about one month. However, the Consumer Price Index tends to be less volatile because it has relatively higher weights for agricultural products and services."

Recently, producer price inflation has surged in other countries as well, raising concerns about inflation. The U.S. producer price in March rose 1.0% from the previous month, and China's March producer price increased 1.6% month-on-month.

In particular, a significant rise in producer prices in China, the world's largest exporter, could fuel global inflation. Nomura economist Lu Ting predicted, "A sharp rise in producer prices in China, the world's largest exporter of manufactured goods, inevitably affects other countries' economies."

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