Import Price Index Up 20% YoY... Terms of Trade Worsen for 15 Consecutive Months

On the afternoon of May 23, container unloading operations are underway at Busan Port's Sinsundae and Gammam Wharf. [Image source=Yonhap News]

Although the growth in import value last month eased somewhat compared to the previous month, it was recorded to have increased by more than 20% compared to a year ago. As import prices rose more steeply than export prices, the net barter terms of trade index declined for the 15th consecutive month.

According to the "June Trade Index and Terms of Trade" (based on the dollar, provisional) released by the Bank of Korea on the 28th, the import value index last month was 167.54 (2015 = 100), up 20.5% from a year earlier. This marks the 19th consecutive month of increase, though the rise was smaller than the 32.0% increase in May.

Items such as transport equipment (-10.4%) and machinery and equipment (-0.8%) decreased, but minerals (48.9%), computers, electronics, and optical equipment (22.1%) rose significantly. The import volume index (120.53) showed a rate of change of -1.3%, turning downward for the first time in two months.

Son Jin-sik, head of the Price Statistics Team at the Bank of Korea’s Economic Statistics Department, explained, "The import value index rose significantly compared to a year ago due to the sustained high level of international oil prices," but added, "Recently, the year-on-year growth rate of international oil prices has gradually decreased, and raw material prices have also fallen, resulting in a smaller increase."

The export value index in June was 139.52, up 6.9% from a year earlier, marking the 20th consecutive month of increase. On the other hand, the export volume index (117.84) fell by 2.7%, returning to a downward trend after nine months. By item, export values of coal and petroleum products (79.1%) and agricultural, forestry, and fishery products (41.4%) rose sharply.

The terms of trade worsened further. The net barter terms of trade index (85.18) fell 10.0% from a year earlier as the import price increase rate (22.0%) outpaced the export price increase (9.9%). This marks the 15th consecutive month of decline compared to the same month last year.

The net barter terms of trade index is the ratio of the price of one unit of export goods to the price of one unit of import goods, serving as an indicator of how much import volume Korea can obtain per unit of export. A lower index means worsening terms of trade.

The income terms of trade index (100.38), which shows the total volume of goods that can be imported with Korea’s total export value, fell 12.4% from a year earlier. This is the largest decline in 3 years and 9 months since September 2018 (-12.8%).

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