Producer prices down for 2nd month in Dec. on falling oil prices, weak dollar

Economy 06:00 January 20, 2023

SEOUL, Jan. 20 (Yonhap) -- South Korea's producer prices fell for the second straight month in December, as falling oil prices and a weak dollar resulted in a decline in costs of manufactured products, central bank data showed Friday.

The producer price index, a major barometer of consumer inflation, dropped 0.3 percent in December from a month earlier, according to the preliminary data from the Bank of Korea (BOK). This followed a 0.3 percent decline in November.

From a year earlier, the index rose 6 percent, decelerating for the sixth straight month since June, when it jumped 10 percent.

For all of 2022, however, the index surged 8.4 percent on-year, the fastest gain since 2008, when it gained 8.6 percent.

The latest letup is attributed to a fall in oil prices and the dollar's value, which combined to help drive down the costs for local manufacturers. The prices of manufactured goods fell 1 percent on-year in December.

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

In December, consumer prices rose 5 percent on-year, sharply slowing from a 6.3 percent spike in July, which marked the fastest rise since November 1998. They still remained higher than the BOK's target range of 2 percent.

Last week, the BOK hiked the benchmark interest rate from 3.25 percent to 3.5 percent, the highest level since late 2008, as it grapples with stubbornly high inflation. The rate increase marked the seventh straight one since April last year.