84%↑... Tear-inducing Onion Prices

Producer Prices Rise for 6 Consecutive Months
Up 9.9% Compared to Same Month Last Year

The COVID-19 pandemic, the Russia-Ukraine war, China's lockdown measures, the U.S. interest rate hikes, and soaring international oil prices have all contributed to ongoing inflation. On the 20th, a citizen is purchasing onions individually at a large supermarket in downtown Seoul. The Ministry of Agriculture, Food and Rural Affairs has promoted the expansion of individual sales of onions, paprika, and other items to ease the burden on shoppers.
Photo by Moon Honam munonam@

[Asia Economy Reporter Seo So-jeong] Last month, as prices of manufactured goods and services rose, the producer price index, a leading indicator of consumer prices, increased for the sixth consecutive month.

According to the Bank of Korea on the 22nd, the producer price index for June was 120.04 (2015 = 100), up 0.5% from May (119.43), continuing its upward trend. Compared to the same month last year, it rose 9.9%, marking 19 consecutive months of increase.

The producer price index measures price changes of goods and services supplied by domestic producers to the market and is used as an economic trend indicator. The producer price index rose for 13 consecutive months until November last year, remained unchanged in December, and has been rising for six consecutive months since January this year. However, the month-on-month growth rate has gradually decreased from 1.6% in April, 0.7% in May, to 0.5% in June.

Son Jin-sik, head of the price statistics team at the Bank of Korea, explained, "In March and April, producer prices rose due to increases in international raw material prices, but in June, the rise narrowed as prices of some raw materials such as metals fell."

Looking at the price index changes by sector, agricultural, forestry, and fishery products rose 0.7% month-on-month due to increases in agricultural products (1.2%) and fishery products (3.0%). Manufactured goods rose 0.7% month-on-month, led by coal and petroleum products (4.7%) and chemical products (1.6%). Electricity, gas, water, and waste services rose 0.2% month-on-month, with electricity, gas, and steam increasing by 0.2%. Services rose 0.2% month-on-month, driven by restaurant and accommodation services (0.7%) and transportation services (0.6%).

Among detailed items, agricultural products such as onions (84.0%), lettuce (65.7%), and radish (12.2%) saw significant price increases. In the case of onions, severe drought this spring led to poor growth conditions and a sharp decrease in shipments, causing prices to surge. Prices of gasoline (11.2%), diesel (9.8%), magazines and periodicals (5.2%), and international air passengers (4.1%) also rose. Chicken and pork prices increased by 34.9% and 19.2%, respectively, compared to a year ago.

The domestic supply price index, which measures price changes of goods and services supplied domestically, also rose for six consecutive months. Raw materials (4.2%), intermediate goods (0.3%), and final goods (0.6%) all increased, resulting in a 0.8% rise month-on-month. Compared to the same month last year, it rose 16.0%, continuing an upward trend for 17 consecutive months.

The total output price index, which measures price changes of goods and services based on total production including domestic shipments and exports, also rose 0.6% month-on-month, led by manufactured goods (0.9%).

Regarding the outlook for producer prices in July, Team Leader Son said, "Recently, international oil prices have been falling, which is expected to slow the rise in producer prices. However, due to many uncertainties such as the resurgence of COVID-19, economic slowdown, the Ukraine situation, and exchange rates, we need to monitor the trend more closely."

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