South Korea’s producer prices dropped in August on-year, according to data released by the central bank Tuesday, marking the second consecutive month of decline and feeding concerns that it may lead to a prolonged state of weak consumer prices.
According to the Bank of Korea, the producer price index dipped 0.6 percent to 103.73 on-year in August. The reading follows July’s corresponding figure of 103.5, which fell 0.3 percent on-year and marked the first on-year drop in 33 months.
Farmers pick apples from the ground in an orchard in Paju, Gyeonggi Province on Sept. 11. (Yonhap)
On-month, the PPI overall increased 0.2 percent.
Excluding the volatile food and energy components, producer prices declined 0.2 percent on-year and climbed 0.1 percent from the previous month.
The price index for agricultural and manufactured goods shed 8.7 percent and 1.6 percent on-year, respectively, while gaining 3.3 percent and 0.1 percent on-month. The services index increased 1.2 percent on-year and gained 0.1 percent on-month.
Of the manufactured products, the index for energy and petroleum products fell 9.5 percent and 13.2 percent on-year, respectively. The components include coal and semiconductors, which are South Korea’s main export items.
The PPI follows price movements of the producers and often serves as a leading indicator for the consumer price index. The CPI, meanwhile, is a key indicator of inflation of consumer goods and services.
The nation’s on-year consumer price growth hit a record low in August, remaining flat and hovering below the 1 percent-level for the eighth consecutive month, according to recent data from Statistics Korea. The reading, which reflects a drop in prices of agricultural and petroleum products, was the lowest since 1965, when the government first adopted the index.
The PPI and CPI data come as the export-reliant economy is struggling to revive exports, which have slid for nine consecutive months as of August. The nation’s exports fell nearly 22 percent in the first 20 days of September to $28.5 billion, according to data released by the Korea Customs Service on Monday.
By Jung Min-kyung (email@example.com