Korean producer prices fall for second month in a row amid falling oil prices

Shoppers shop at a large discount chain store in Seoul. (YONHAP)

Korea’s producer prices fell for the second month in a row in September, driven by a fall in prices for oil and related products, central bank data showed on Tuesday.

Producer price index, a key barometer of consumer inflation, fell 0.2 percent last month from a month earlier, following a 0.2 percent month-on-month fall in the previous month, according to preliminary data from the Bank of Korea (BOK).

On an annualized basis, the index rose 1 percent last month after gaining 1.6 percent year-on-year in the previous month.

The growth is explained by a monthly decline in prices for oil and related products by 6.3 percent. However, agricultural commodity prices rose 5.3 percent over the month, the data showed.

Producer prices are one of the key indicators that determine the path of inflation, as they influence the prices that businesses charge consumers in the coming months.

Korean consumer prices slowed to their lowest level in three and a half years in September, falling below 2 percent for the first time since early 2021.

Consumer prices, a key measure of inflation, rose 1.6 percent year-on-year last month, compared with a 2 percent rise the month before.

Earlier this month, the Bank of Kazakhstan cut its key interest rate by a quarter of a percentage point to 3.25 percent, ending its restrictive policy as inflation curbed and domestic demand fell.

The central bank imposed a restrictive regime, raising borrowing costs seven times in a row from April 2022 to January 2023, to curb rising inflation in Asia’s fourth-largest economy.

Yonhap