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Producer prices down 0.4% in June on oil price drop

South Korea’s producer prices fell slightly for a fourth straight month in June, reflecting the recent drop in oil and raw material prices, the nation’s central bank data showed Wednesday.

The producer price index as of the end of June stood at 101.79, down 0.4 percentage points from the previous month and 0.9 percentage points up from the end of last year, according to provisional data released by the Bank of Korea.

The corresponding index, indicating the price fluctuation of products and services available in the domestic market, is seen as a pre-emptive gauge of possible inflationary pressures.

The reason for the steady decrease was mostly the price of the benchmark Dubai crude oil, which fell to $46.47 in June, down 8.4 percentage points from $50.72 in May, according to the BOK.

(Yonhap)
(Yonhap)

Despite the on-month fall, however, the producer price index jumped 2.8 percentage points in June from the same period last year, marking the eighth consecutive month of gains, data showed.

Prices of coal and petroleum products fell 4 percent in June from a month earlier but still marked a 4.6 percentage points rise from a year earlier.

The prices of chicken and eggs -- both directly impacted by bird flu outbreaks -- dipped last month, but still remained considerably higher than at the same time last year.

Egg prices fell 0.8 percentage points from May, stuck at 118.4 percent higher than June last year, while chicken prices plunged 24.6 percentage points on-month, standing 8.2 percent higher than June last year.

A bird flu outbreak earlier this year squeezed the supply of chicken and eggs, consecutively triggering a price increase, but the overall supply remained relatively steady last month, the BOK explained.

Squid, which has recently been growing scarce, is facing a rapid price increase, 11.8 percentage points on-month rise for fresh squids and a 13.4 percentage points rise for frozen ones.

The producer price index in the service sector in June remained on the same plane as May, up 0.1 percentage point in the restaurants and lodging industry and 0.4 percentage points in finances and insurance. The transportation industry saw a 0.3 percentage points decrease on-month.

By Bae Hyun-jung (tellme@heraldcorp.com)
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