Seoul: South Korea's producer prices saw a decline for the first time in six months in April, primarily due to the decrease in global oil prices, as reported by the central bank data on Friday. The producer price index, which serves as a crucial indicator of consumer inflation, fell to 120.24 in April, marking a 0.1 percent decrease from 120.36 in March, according to preliminary data from the Bank of Korea (BOK). This decline is the first since October 2024, when the index also experienced a 0.1 percent drop.
According to Yonhap News Agency, despite the monthly decline, April's producer price index showed a 0.9 percent increase on a yearly basis, maintaining an on-year rise for the 21st consecutive month. Producer prices play a significant role in determining the path of inflation, as they affect the prices businesses charge consumers in the future. In April, prices in the agricultural, fisheries, and food sectors fell by 1.5 percent from the previous month, while petroleum product prices decreased by 2.6 percent.
The data also indicated that the domestic supply price index, which factors in both producer and import prices, decreased by 0.6 percent on a monthly basis in April. A BOK official, Lee Moon-hee, explained during a press briefing that the reduction in international oil prices has resulted in lower costs for coal, petroleum, and chemical products, while increased production and shipments have led to a decrease in agricultural prices. Lee noted that with the continuous fall in average oil prices, inflationary pressures are expected to ease in May.
The average price of Dubai crude, which is South Korea's benchmark, was recorded at US$67.74 per barrel in April, down from $72.49 the previous month, as per government data. Meanwhile, consumer prices, another key measure of inflation, grew by 2.1 percent on-year in April, marking the fourth consecutive month that inflation remained within the 2 percent range. The central bank had earlier predicted a 1.9 percent rise in consumer prices for the entire year of 2025.