[Weekly Outlook] Will Producer Prices Fall for 2 Consecutive Months... Trade Balance Also in Focus This Month

On the 11th, amid high inflation and ongoing economic slowdown, customers were shopping at the Nonghyup Hanaro Club Yangjae branch in Seocho-gu, Seoul. Photo by Jinhyung Kang aymsdream@

[Asia Economy Sejong=Reporter Lee Jun-hyung] The government will announce last month's Producer Price Index on the 21st. Next week (17th-21st), export-import statistics for the period from the 1st to the 20th of this month will also be released, drawing attention to the scale of the trade deficit.

According to related ministries on the 16th, the Bank of Korea will announce the "September Producer Price Index" on the 21st of this month. The Producer Price Index was 120.12 (2015=100) as of August, down 0.3% from the previous month. This is the first decline in the Producer Price Index in 1 year and 10 months since October 2010. However, compared to a year ago, it is still 8.4% higher.

The Producer Price Index shows the price changes of goods and services supplied by domestic producers to the market. It is used as a leading indicator of the Consumer Price Index.

The reason for the decline in the Producer Price Index in August lies in international oil prices. In fact, the decrease in the Producer Price Index in August compared to the previous month was largely due to the fall in international oil prices, which caused prices of manufactured goods such as coal and petroleum products (-8.6%) and chemical products (-2.4%) to drop by 1.4%. Attention is focused on whether the Producer Price Index, which is usually reflected in the Consumer Price Index with a lag of 1 to 3 months, will decline for two consecutive months following August.

Cumulative Trade Deficit Surpasses 30 Billion Dollars

Next week, export-import statistics for the period from the 1st to the 20th of this month will also be announced. According to the Korea Customs Service, the trade balance for the period from the 1st to the 10th of this month recorded a deficit of 3.825 billion dollars. During the same period, exports amounted to 11.797 billion dollars, down 20.2% year-on-year, while imports were 15.622 billion dollars, decreasing by only 11.3%.

The cumulative trade deficit accumulated up to the 10th of this month this year has already reached 32.714 billion dollars. This is the largest since trade statistics began in 1956. The previous annual record was 20.6 billion dollars, recorded in 1996 just before the foreign exchange crisis.

Given this situation, attention is also focused on the trade balance for the period from the 1st to the 20th of this month. The trade balance has recorded deficits for six consecutive months since April this year. If the trade balance also shows a deficit from the 1st to the 20th of this month, there is a high possibility that the trade deficit will continue for seven consecutive months. There is also growing speculation that the annual trade deficit could exceed 30 billion dollars for the first time in history.

'Regulatory Innovation TF' Meeting Held

Meanwhile, the government continues its regulatory reform efforts. The government plans to hold the "3rd Economic Regulatory Innovation Task Force (TF)" chaired by Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho on the 17th. The TF is composed of seven working groups that identify regulatory innovation tasks in various fields and prepare improvement measures.

Previously, the government identified 36 regulatory innovation tasks at the 2nd TF meeting last month. The TF intends to build social consensus through collecting opinions from various sectors on key tasks that attract high public interest but involve complex interests.

Also, Statistics Korea will release the "2020-2050 Future Household Projections (by Province)" on the 19th. The data will include the total number of households by province, household growth rates, and household types.

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