Producer Prices Rise for 6 Consecutive Months... Impact of Raw Material Price Increase

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Eun-byeol] As international raw material prices remain strong, producer prices, centered on manufactured goods, have risen for six consecutive months.

According to the Bank of Korea on the 21st, the producer price index for April was 107.68 (2015 level 100), 0.6% higher than March's 107.04. This marks six consecutive months of increase since last November.

Looking at the month-on-month rate of change by item, prices of manufactured goods rose by 1.1%. In particular, due to the rise in raw material prices, primary metal products (3.2%) and chemical products (2.1%) saw significant increases.

Agricultural, forestry, and fishery products, which led price increases last winter, fell by 2.9%. Agricultural products (-8.2%) and fishery products (-1.1%) stabilized somewhat, but livestock products rose by 4.8% instead.

Producer prices in the service sector also rose by 0.3% compared to March, mainly driven by finance and insurance (1.1%) and restaurants and accommodation (0.5%).

Among detailed items, prices of onions (-46.0%), strawberries (-31.7%), naphtha (-4.9%), and diesel (-3.3%) decreased, while pork (15.0%), steel pipe fittings (20.0%), ordinary rebar (7.4%), DRAM (16.7%), parcel delivery (3.9%), and consignment sales fees (4.3%) increased.

Although it varies by item, the Bank of Korea explains that producer prices generally affect consumer prices with a lag of about one month.

The domestic supply price index, which measures price changes including imported goods, also rose 0.7% month-on-month due to increases in raw materials and intermediate goods prices. The total output price index for April, which includes domestic shipments plus exports, also rose 1.0% compared to March.

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