In December last year, producer prices rose 0.7% compared to the previous month. The price of agricultural products, which soared last summer due to an unusual rainy season and typhoon, seemed to be caught in October-November, but it was affected by a sharp rise again in December. The rise in international oil prices and the increase in the prices of industrial products such as coal and petroleum products also greatly contributed to the increase in producer prices.
According to the’December 2020 Producer Price Index’ released by the Bank of Korea on the 21st, the producer price index last month was 103.78 (2015 = 100), up 0.7% from the previous month.
The producer price index is an index that measures the overall price level of goods and services that producers ship to the market in Korea. It is calculated on the basis of the delivery price before going through the distribution stage and is used as a leading indicator of consumer price. In general, if the producer price index rises, consumer prices are likely to rise in the future. Last year, the annual producer price index fell 0.5% from the previous year.
The producer price index remained flat in May after falling for three consecutive months from the previous month from February of last year. After that, it started to rise from June and continued to rise for 4 consecutive months until September. Then, after the uptrend declined in October, it remained flat in November, and slightly increased in December. Compared to the same month of the previous year, the producer price index, which had declined for 9 consecutive months from March to November of last year, turned upward by 0.1% in December.
Looking at the items that make up the producer price index, the Agriculture, Forestry and Fisheries Index was 127.16, up 2.3% from the previous month. The Agriculture, Forestry and Fisheries Index was 139.66 in September last year, a record high since the statistics were prepared in January 1965. It is the aftermath of the rainy season and typhoon that hit the Korean Peninsula last summer. Afterwards, it fell sharply in October to 126.22, down 9.6%, and in November it continued to decline to -1.6%. The downtrend for the second consecutive month turned to an uptrend after two months into December. Livestock and aquatic products declined -1.0% and -0.6%, respectively, due to increased supply and contraction in consumption, but agricultural products rose 5.9%, leading to the overall rise of the Agriculture, Forestry and Fisheries Index.
The industrial products index recorded 100.71, a 1.0% increase from the previous month on the back of rising international oil prices and recovery in downstream industry demand. In particular, coal and petroleum products rose 11.0% MoM, showing a sharp rise, and chemical products also increased 1.2%, leading the industrial product index to rise. The index of’electricity, gas, water and waste’ rose 0.6% from the previous month, mainly for industrial city gas rates, according to the fuel cost index. In December, the service index was 107.27, up 0.2% from the previous month. Financial and insurance services rose 1.8%, and transportation fell to -0.1%.
Last year, the annual producer price index fell 0.5% from the previous year to 103.02. The Agriculture, Forestry and Fisheries Index and Service Index rose 9.6% and 1.3%, respectively, due to natural disasters, decreased shipments, and increased labor costs. However, the industrial products index fell 2.6% due to the spread of Corona 19 and the drop in international oil prices, making up for the rise in the agriculture, forestry and fishery products and services index.
In December, the domestic supply price index rose 0.7% MoM to 101.68, with all of raw materials, intermediate goods and final goods rising. This is a 2.7% decrease from the same month last year. The domestic supply price index is an index that measures the overall price level of goods and services supplied to the domestic market, including imports and the producer price index. This index is divided into raw materials, intermediate goods, and final goods, and is used to understand the step-by-step spread of prices.
In the case of raw materials, both domestic shipments and imports rose 3.6% from the previous month. Imports of intermediate goods fell, but domestic shipments rose 0.6% from the previous month. In the final product, consumer goods and services rose 0.2% from the previous month. The annual domestic supply price index in 2020 was 102.29, down 2.3% from the previous year. Raw materials and intermediate goods fell 16.4% and 2.0%, respectively, but final goods rose 0.5%.
In December, the total output price index, including domestic shipments and exports, rose 0.5% from the previous month to 101.05. It also fell 1.4% compared to the same month last year. The total price index is a measure of the price fluctuations of goods and services on the basis of total calculation including exports in addition to domestic shipments in order to understand the overall price fluctuations of domestic products. The total output price index in 2020 fell 1.6% from the previous year.
Reporter Nam Jeong-hoon [email protected]
Photo = Yonhap News
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