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(LEAD) S. Korea's producer prices extend slump in Dec.

All News 08:35 January 19, 2016

(ATTN: UPDATES with more details in para 5; ADDS annual producer prices in last 5 paras)

SEOUL, Jan. 19 (Yonhap) -- Producer prices in South Korea dipped to a new six-year low in December due largely to a drop in prices of industrial goods, central bank data showed Tuesday.

The producer price index came to 99.06 last month, down from a revised 99.25 the previous month, according to preliminary data from the Bank of Korea (BOK).

Producer prices serve as a barometer of future consumer inflation.

The December figure marked a 0.2 percent on-month drop, slowing from a 0.4 percent cut in the previous month.

December marks the sixth consecutive month the index has declined from the previous month. From a year earlier, last month's figure marks a 3.93 percent drop.

The fall was mostly attributed to a decline in prices of industrial products, which slipped 0.5 percent on-month, while the index for agricultural goods surged 1.7 percent from the previous month.

The price of coal and petroleum continued to fall rapidly amid a drop in global oil prices, plunging 23.5 percent on-year in December, according to the BOK data.

For the whole of 2015, producer prices fell 4 percent on-year to 100.95 due mainly to weaker oil prices.

The annual drop is the steepest tallied since 1990, when the BOK started releasing current producer price data. The drop is far more precipitous than the 2.1 percent fall reported in 1999, as South Korea struggled with the fallouts from the Asian financial crisis.

"A decline in international commodities, including crude oil, caused local producer prices in such areas as petroleum, chemical and metal products to backtrack," a BOK official said. He said producer prices for manufactured goods fell 6.7 percent on-year in 2015, with coal and petroleum prices plunging 31.7 percent.

The latest data, however, showed numbers for the agricultural and service sectors rising 2.3 percent and 1.2 percent, respectively, last year.

Service sector growth was fueled by gains in hospitalities and real estate businesses, the BOK said.


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