Producer prices rise for 9th consecutive month in May

Lead

South Korea's producer prices rose for the ninth consecutive month in May, driven by higher petroleum and raw material costs amid the ongoing Middle East crisis, according to central bank data released Friday. The producer price index (PPI), a key gauge of future consumer inflation, climbed 0.8 percent last month from a month earlier, decelerating from the previous month's 2.8 percent on-month gain.

Coverage Comparison

Two reports from Yonhap News covered different aspects of the same data release. One focused on producer prices, while the other highlighted import price trends. Both reports drew on preliminary data from the Bank of Korea (BOK), but they emphasized distinct indicators.

The producer price report noted that April's producer prices rose at the sharpest monthly pace since February 1998, when the index also rose 2.5 percent in the midst of a global financial crisis. From a year earlier, producer prices rose 8.5 percent in May.

The import price report, released earlier in the week, showed that import prices fell for the second month in a row in May, due to a decrease in oil prices. The import price index fell 0.3 percent on-month, following a 2.1 percent on-month decline in April. On an on-year basis, the index climbed 24.8 percent in May.

Key Claims

Yonhap reported that the producer price index climbed 0.8 percent on-month in May, with prices of industrial goods increasing 0.7 percent. The rise was attributed to higher coal and petroleum product prices. In contrast, prices of agricultural, livestock, and fisheries products fell 0.8 percent on-month, while service prices gained 1.2 percent.

The domestic supply price index, which reflects both producer and import prices, remained unchanged on-month in May, according to the data.

The conflict in the Middle East, which began in late February following U.S.-Israeli strikes on Iran, has since escalated into a broader regional crisis, pushing up global oil prices amid supply disruptions, Yonhap reported.

Separately, the import price report noted that the decline in import prices was driven by a 2.4 percent on-month fall in the price of Dubai crude, South Korea's benchmark, to US$103.15 per barrel last month. Prices of raw materials fell 1 percent in May from a month earlier, while intermediate goods remained unchanged.

The import price report also said that the May export price index increased 0.3 percent from the previous month, extending its on-month rise for the 11th month. Compared with a year earlier, the index jumped 46.9 percent.

The numbers have direct bearing on South Korea as the country relies heavily on energy imports, and import prices are a key driver of inflation, as they affect production costs and consumer prices throughout the supply chain, according to the central bank.

Producer prices are a key indicator of future inflation trends, as they influence the prices businesses charge consumers in the months ahead, Yonhap reported.