Endless Price Increases... Producer Price Index Rises at Largest Rate in 13 Years (Comprehensive)

November Soars 9.6% Year-on-Year
Prices to Rise Further Amid Continued Increases in Oil and Raw Material Costs

[Asia Economy Reporter Jang Sehee] Due to the rise in international oil prices and raw material costs, South Korea's Producer Price Index (PPI) surged last month at the largest rate in 13 years. Since an increase in producer prices typically leads to a rise in consumer prices, the perceived inflation is expected to intensify.

The Bank of Korea announced on the 21st that the November Producer Price Index stood at 112.99 (2015 base 100), marking a 9.6% increase compared to the previous year. This rate of increase was the highest in 13 years and 1 month since October 2008 (10.8%). The PPI has maintained record highs for eight consecutive months since April. Compared to the previous month, it rose by 0.5%.

The sharp rise in producer prices was largely influenced by increases in international oil and raw material prices. Choi Jinman, head of the Price Statistics Team at the Bank of Korea’s Economic Statistics Bureau, stated, "As international oil and raw material prices continue to rise, increases are centered on coal and petroleum products, chemical products, and primary metal products, with the upward trend persisting."

Looking at the month-on-month changes by item, manufactured goods rose by 0.5%. Among manufactured goods, coal and petroleum products saw the highest increase at 3.8%, while primary metal products and chemical products rose by 0.9% and 0.7%, respectively. Prices in the electricity, gas, water, and waste sectors also increased by 1.8%. Conversely, computer, electronic, and optical equipment prices fell by 0.2%. Specific items that rose compared to the previous month included diesel (3.1%), gasoline (6.2%), plastic pipes (17.3%), ferroalloys (19.5%), and napa cabbage (53.5%).

The Bank of Korea expects the expansion of producer prices to slow somewhat next month. Team leader Choi noted, "Based on recent data, international oil and raw material prices are showing a downward trend."

However, experts believe that aside from oil prices, most raw material prices such as natural gas and zinc remain high, and that the Omicron variant could further drive up inflation.

Professor Kim Sangbong of Hansung University’s Department of Economics emphasized, "If prices of some raw materials rise, overall inflation is likely to increase. If the labor supply chain is affected by the spread of Omicron, prices of both goods and services could rise." Regarding the global inflation phenomenon, he added, "The worldwide price increases in countries like the United States and China also impact South Korea. In particular, high inflation in the U.S. is a factor that raises prices of some imported items such as automobiles."

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