Global slowdown pulls down producer pricesKorea’s producer price growth decelerated in May mainly due to a slowdown in the global economy, the central bank said yesterday.
The producer price index, a barometer of future consumer inflation, rose 1.9 percent on-year to 124.6 last month, compared with a 2.4 percent increase in April, according to the Bank of Korea.
Compared to April, prices fell 0.6 percent, the sharpest on-month contraction since the 0.8 percent minus growth reported for October 2009.
The slower on-year gain last month was largely attributed to the lower manufacturing and service sector price gains caused by sluggish global economic growth.
“May’s producer numbers can be seen as a sign that overall prices are stabilizing,” a BOK official said.
Manufacturing prices rose 1.6 percent on-year following a 2.5 percent gain tallied in April, while service sector prices edged up 0.8 percent, just less than a 1 percent gain a month earlier.
Utility prices, including electricity and gas, also moved up 7.7 percent vis-a-vis the 10.1 percent growth reached in April, while farm product prices jumped 5.3 percent, up from a 0.2 percent increase in April.
Prices of manufactured goods were down 0.7 percent, with farm and fisheries prices dropping 1.6 percent. The service sector also dipped 0.1 percent from April, helped by lower telecommunication and financial costs.
The latest data is expected to exert a positive influence on domestic consumer prices in the future, the central bank said.
In May, the country’s consumer price index rose 2.5 percent from a year earlier, unchanged from the 2.5 percent gain tallied in April.
This is much lower than last year’s figure of 4 percent, which is the upper limit of the central bank’s 2-4 percent target band. For 2012, Seoul expects consumer prices to rise 3.2 percent.