South Korea’s producer price growth decelerated in May mainly due to a slowdown in the global economy, the central bank said Monday.
The producer price index, a barometer of future consumer inflation, rose 1.9 percent on-year to 124.6 last month, compared with a 2.4 percent increase in April, according to the Bank of Korea.
Compared to the month before, prices fell 0.6 percent, the sharpest on-month contraction since 0.8 percent minus growth reported for October 2009.
The slower on-year gain last month was largely attributed to the lower manufacturing and service sector price gains caused by sluggish global economic growth.
“May’s producer numbers can be seen as a sign that overall prices are stabilizing,” a BOK official said.
Manufacturing prices rose 1.6 percent on-year from a 2.5 percent gain tallied in April, while service sector prices edged up 0.8 percent, down compared to 1 percent a month earlier.
Utility prices, including electricity and gas, also moved up 7.7 percent vis-a-vis 10.1 percent growth reached in April, while farm product prices jumped 5.3 percent, up from 0.2 percent in April.
From a month earlier, manufactured goods prices were down 0.7 percent, with farm and fisheries prices dropping 1.6 percent. The service sector also dipped 0.1 percent vis-a-vis April, helped by lower telecommunication and financial costs.
The latest data, meanwhile, is expected to exert positive influence on domestic consumer prices down the line, the central bank said.
In May, the country’s consumer price index rose 2.5 percent from a year earlier, unchanged from the 2.5 percent gain tallied in April.
This is much lower than last year’s figure that reached 4 percent, which is the upper limit of the central bank’s 2-4 percent target band. For 2012, Seoul expects consumer prices to rise 3.2 percent.