Central bank price data shows Korean economy reboundingKorean producer prices fell in January compared to a year earlier, but the pace of decline hit a 16-month low. However service-sector prices rose, underlining the improving sentiment in Asia’s fourth-largest economy.
According to central bank data released yesterday, the producer price index fell 0.3 percent in January from a year earlier, following a 0.4 percent drop in December, which marks the slowest decline since a 0.2 percent gain in September 2012.
The Bank of Korea did not provide its own assessment of the price data, but the figures came amid signs showing the economy was in a sustained recovery on the back of improving demand both at home and from abroad.
In addition, the sub-index on service-sector produce prices, which is strongly influenced by consumer sentiment, rose 1.3 percent in January from a year earlier, the sharpest gain in 14 months, the central bank data showed.
Korea’s annual consumer inflation has remained unusually low, coming at 1.1 percent in January compared to the central bank’s target of 3 percent, but the Bank of Korea expects inflation to pick up over the coming months.
Meanwhile for the first time in 50 years, the central bank removed incandescent light bulbs from its producer price index. The light bulb was one of the first items included when the producers’ price index was created in 1965.
Metallic accessories, such as neckpin and medals, were taken out as well.
Instead, 24 new items were added, including 18 manufactured goods and five agricultural and marine products.