S. Korea's Producer Prices Rise for Second Month as Cabbage Prices Surge 42.9%

Napa cabbages on display at a market in South Korea. (Yonhap) South Korea's producer prices rose for the second consecutive month, driven by Chuseok holiday demand and changes in public utility rates. According to preliminary September Producer Price Index data released by the Bank of Korea on Oct. 21, the index stood at 129.78, up 0.2% from the previous month. After declining in July for the first time in 11 months, the index rebounded in August and continued to rise in September. The increase was primarily driven by sharp gains in agricultural and livestock prices ahead of the holiday season. Prices of agricultural, forestry and fishery products rose 2.6% month on month, with napa cabbage prices surging 42.9% and driving a 3.7% increase in overall agricultural prices. Livestock prices also climbed 2.7% as demand for holiday gifts and ceremonial offerings increased, with beef prices jumping 10.4%. Higher energy costs added further upward pressure. Prices in the electricity, gas, water and waste category rose 1.3% from the previous month, largely driven by a 13.4% surge in residential electricity prices following the expiration of temporary summer discounts on progressive electricity rates. Wholesale prices for industrial city gas also increased 6.6%, contributing to the rise. Industrial product prices, by contrast, remained unchanged from the previous month. Although naphtha prices rose 10.0% and ethylene prices increased 1.0%, these gains were offset by a 1.7% decline in electronic and optical equipment prices. Computer memory device prices fell 11.8%, while OLED prices dropped 4.0%. Service prices also declined 0.1% as the summer peak season ended, with hotel rates falling 6.6% and tourist accommodation prices dropping 15.8%. Domestic supply prices were unchanged from the previous month, marking a moderation in their earlier decline. Although raw material prices rose 3.2%, prices of intermediate and final goods each fell 0.3%, helped by lower import prices. The Bank of Korea explained that despite an increase in international oil prices in August, a 3.4% decline in the average exchange rate in September from the previous month helped partially contain import price pressures. Looking ahead, changes in public utility rates and oil prices are expected to be key factors shaping inflation. Lee Heung-hu, head of the Price Statistics Team at the Bank of Korea, said declining oil prices through mid-October could exert downward pressure, while increases in industrial city gas rates and aviation fuel surcharges could push prices higher. He added that accumulated production costs could eventually feed through to consumer prices after a time lag. 비지니스코리아 businesskorea (Businesskorea)