Due to Rising Oil Prices, June Import Prices Up 14.0% Year-on-Year... Highest Since September 2014

Bank of Korea 'June 2021 Export and Import Price Index'

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Eunbyeol] As oil and raw material prices rise, the import price index in June recorded the highest level since September 2014.

According to the 'June 2021 Export and Import Price Index' announced by the Bank of Korea on the 14th, the import price index in June was 115.43 (2015=100), marking the highest level since September 2014 (115.77). The import price index rose 2.3% compared to the previous month, increasing for two consecutive months, and jumped 14.0% compared to the same month last year, rising for four consecutive months.

The rise in import prices in June was driven by increases in international oil prices, which pushed up prices of mining products, coal, and petroleum products. The price of Dubai crude oil rose from $66.34 per barrel in May to an average of $71.60 per barrel in June.

Accordingly, raw materials, centered on mining products, increased by 6.4% compared to the previous month, and intermediate goods such as coal and petroleum products and primary metal products rose by 1.0% compared to the previous month. Capital goods and consumer goods remained flat and fell by 0.2%, respectively, compared to the previous month.

Import prices based on contract currency, excluding exchange rate effects, rose 2.6% compared to the previous month and 21.8% compared to the same month last year.

The export price index in June was 107.12, rising 0.7% compared to the previous month, marking an increase for seven consecutive months. Compared to the same month last year, it rose 12.7% as the base effect from last year's COVID-19 shock worked and demand from oil and upstream industries recovered. The year-on-year increase rate is the highest since March 2009 (17.4%).

Export prices rose due to increases in coal and petroleum products, computers, electronics, and optical devices. Agricultural, forestry, and fishery products rose 2.1% compared to the previous month, and manufactured goods increased by 0.7%. Export prices based on contract currency, excluding exchange rate effects, rose 0.9% compared to the previous month and 20.8% compared to the same month last year.

Kim Younghwan, head of the Price Statistics Team at the Bank of Korea's Economic Statistics Bureau, said, "As import prices are rising mainly for raw materials and intermediate goods, the cost pressure on companies' production costs is expected to continue." However, he added that it remains to be seen whether companies will pass on the production cost burden to product prices and whether consumer prices will rise.

Regarding the recent impact of the COVID-19 Delta variant, he said, "There are concerns that the economic recovery trend might be disrupted due to the Delta variant, but since the recent OPEC+ agreement was not reached, volatility in oil prices is increasing from the supply side," adding, "Even in July, oil prices rose 2.9% compared to the previous month as of the 9th, so it is difficult to say that oil prices have declined yet."

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