Seoul: South Korea's producer prices increased at the fastest pace in more than 28 years in April due mainly to higher petroleum and raw materials prices stemming from the ongoing Middle East crisis, central bank data showed Thursday. The producer price index (PPI), a key gauge of future consumer inflation, climbed 2.5 percent from a month earlier to 128.43 last month, according to the preliminary data from the Bank of Korea (BOK).

According to Yonhap News Agency, this marked the sharpest monthly increase since February 1998, when the index also rose 2.5 percent during the global financial crisis. The April reading has risen for the eighth consecutive month since September last year. From a year earlier, producer prices rose 6.9 percent in April, the fastest pace of growth since October 2022.

Producer prices are a key indicator of future inflation trends, as they influence the prices businesses charge consumers in the months ahead. The increase came as prices of industrial goods jumped 4.4 percent on-month in April, driven by a 31.9 percent surge in coal and petroleum products, and a 6.3 percent rise in chemical products. In contrast, prices of agricultural, livestock, and fisheries products fell 1 percent on-month, while service prices gained 0.8 percent.

The domestic supply price index, which reflects both producer and import prices, rose 5.2 percent on-month in April, the data showed. The conflict in the Middle East, which began in late February following U.S.-Israeli strikes on Iran, has since escalated into a broader regional crisis, pushing up global oil prices amid supply disruptions and rattling global markets.