When Will Prices Finally Go Down?

Producer Prices in October Rise for 12 Consecutive Months
Manufactured Goods Increase Due to Rising International Oil Prices

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Recently, due to rising oil prices and raw material costs, the Producer Price Index (PPI) has set record highs for seven consecutive months. In particular, as inflationary trends appear worldwide, concerns about future inflation are also growing.

October Producer Price Index rises 8.9% year-on-year... Highest in 13 years

According to the Bank of Korea on the 20th, the Producer Price Index for October was 112.21 (2015 level = 100), 0.8% higher than September's 111.27. This marks not only 12 consecutive months of increase but also the highest record for seven months since last April. Especially, compared to the same month last year, it rose by 8.9%, the highest level in 13 years since October 2008 (10.9%).

The Producer Price Index measures price changes of goods and services supplied by domestic producers to the domestic market and has about a one-month lag compared to the Consumer Price Index.

Choi Jinman, head of the Price Statistics Team at the Bank of Korea's Economic Statistics Bureau, explained, "The prices of coal and petroleum products rose sharply due to increases in international oil and raw material prices," adding, "The demand has also recovered compared to last year, which influenced the rise." This indicates that upward price pressures from both supply and demand sides are mixed.

Looking at the month-on-month rate of change by item, prices of manufactured goods rose by as much as 1.8%. Among manufactured goods, coal and petroleum products had the highest increase at 12.6%, while primary metal products and chemical products rose by 2.5% and 1.7%, respectively. Prices in the electricity, gas, water, and waste sectors also increased by 2.3%.

On the other hand, prices of agricultural, forestry, and fishery products fell by 4.3%. Livestock products and agricultural products dropped by 5.5% and 4.3%, respectively.

By detailed items, prices of ethylene dichloride (21.1%), diesel (17.4%), aluminum chassis bars (16.4%), hotels (2.0%), and wired telephone services (2.2%) increased.

Conversely, prices of napa cabbage (47.9%), pork (14.9%), beef (7.1%), domestic air passengers (8.2%), and real estate brokerage (4.0%) decreased.

Regarding this, Professor Sung Taeyoon of Yonsei University's Department of Economics said, "Overall price pressures are becoming very intense," and added, "Since it is uncertain when the global supply chain will improve, it is necessary to respond through liquidity withdrawal."

Prices rise in Korea, US, and UK... Growing fear of inflation

Meanwhile, not only in Korea but also globally, inflationary pressures are increasing, and concerns about inflation are growing.

In the United States, the producer price inflation rate rose 8.6% last month, marking the highest level in 10 years and 11 months since November 2010 when related statistics began to be compiled. In particular, truck freight costs increased by 16.3%, reflecting supply chain disruptions impacting prices.

China's Producer Price Index last month also increased by 13.5% compared to a year earlier. This is the highest level in 26 years and 2 months since August 1995 (13.5%) when China began compiling related statistics.

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