Producer Price Index rises 9.6% in one year... largest increase in 13 years

Producer Price Index Rises Again Due to Oil and Raw Material Price Increases
BOK: "Current Raw Material Prices Trending Down Compared to November"

[Asia Economy Reporter Jang Sehee] Due to the rise in international oil prices and raw material costs, the domestic Producer Price Index (PPI) recorded its largest increase in 13 years last month. Since an increase in producer prices typically leads to a rise in consumer prices, inflationary pressures are expected to intensify going forward.

According to the "November 2021 Producer Price Index" released by the Bank of Korea on the 21st, the PPI in November stood at 112.99 (2015 base year = 100), up 0.5% from October. Compared to the same month last year, it rose 9.6%, marking the 13th consecutive month of increase. The growth rate is the largest in 13 years since October 2008, when it rose 10.8% year-on-year.

The overall rise in producer prices was driven by increases in international oil prices and raw material costs. Choi Jinman, head of the Price Statistics Team at the Bank of Korea’s Economic Statistics Bureau, analyzed, "The upward trend in international oil and raw material prices has continued, leading to increases mainly in manufactured goods."

Looking at the month-on-month price index changes by item, manufactured goods rose 0.5%. Among manufactured goods, coal and petroleum products saw the highest increase at 3.8%, while primary metal products and chemical products rose 0.9% and 0.7%, respectively. Prices in the electricity, gas, water, and waste sectors also increased by 1.8%. Conversely, computers, electronics, and optical equipment declined by 0.2%.

By detailed item, diesel (3.1%), gasoline (6.2%), plastic pipes (17.3%), and ferroalloys (19.5%) increased compared to the previous month. On the other hand, real estate brokerage (-4.7%), residential real estate management (-1.0%), and magazines and periodicals (-0.2%) slowed down.

The Domestic Supply Price Index, which measures price changes at the production stage, rose 1.2% month-on-month, mainly due to raw materials. Compared to the same month last year, it increased by 15.9%.

The Total Output Price Index, which reflects overall price changes of domestically produced goods including exports, also rose 0.4% month-on-month, mainly driven by manufactured goods (0.3%). It increased 13.4% year-on-year.

The Bank of Korea expects the expansion of producer prices to slow somewhat next month. Team leader Choi stated, "Based on recent figures, international oil and raw material prices are showing a downward trend," adding, "They are declining compared to November."

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