SEOUL, Aug. 21 (Yonhap) -- South Korea's producer prices dropped slightly from a year earlier in July, marking the first on-year drop in nearly three years, central bank data showed Wednesday.
The producer price index for all commodities came to 103.55 in the month, down 0.3 percent from the same month last year, according to preliminary data from the Bank of Korea (BOK).
The reading marks the first on-year drop since October 2016. From a month earlier, the index remained nearly unchanged.
Producer prices are a key barometer of future inflation of consumer prices.
The producer price index for the agriculture industry dropped 0.1 percent from the previous month, while the index for industrial goods also slipped 0.1 percent on-month.
The index for the service industry, on the other hand, gained 0.2 percent from a month earlier in July.
The growth of the country's consumer prices has remained well below the annual target of 2 percent over the past three years, again gaining only 0.6 percent on-year last month, earlier reports said.
The BOK has forecast consumer prices to increase 0.7 percent this year despite its first policy rate cut in three years last month.
Such low inflation, along with a steady decline in the country's exports, is expected to put pressure on the central bank to further slash its base rate to help spur spending and corporate investment.
South Korea's exports have dipped for eight consecutive months as of July.
The BOK has said it may consider an additional rate reduction should downside risks increase in the face of the escalating trade dispute between the United States and China, as well as the country's own trade spat with Japan.
Retail giants undergoing painful restructuring amid earnings shock
New coronavirus set to spell trouble for S. Korean economy
(News Focus) Korean manufacturers bear brunt of new coronavirus
(News Focus) Virus outbreak has no imminent impact on Korean retail sector, yet on preemptive alert
Wealth management service increasingly popular in S. Korea