Korea's producer prices increase for seventh straight month

People shop for groceries at a discount mart in Seoul on Tuesday. [YONHAP]

Korea's producer prices increased for the seventh straight month in July as electricity and transportation service bills rose, raising worries that it could add to upward pressure on already-high inflation, central bank data showed Thursday.

The producer price index, a major barometer of consumer inflation, stood at 120.47 last month, up 0.3 percent from the previous month, according to the preliminary data from the Bank of Korea (BOK).

Compared with a year earlier, the index jumped 9.2 percent, the 20th consecutive month of on-year rises.

Manufactured product prices were down 0.6 percent on-month in July thanks in part to a fall in coal and oil prices. But electricity and other service bills, including transportation costs, drove up the index.

Farming good prices also jumped 11.9 percent, though prices of livestock and fishery products declined 2 percent and 3.5 percent, respectively.

An increase in producer prices is feared to add to upward pressure on inflation as it could translate into higher prices of consumer goods.

The country's consumer prices soared 6.3 percent in July from a year earlier, the fastest pace in almost 24 years, amid high energy and food prices

To tame inflation, the central bank hiked its key interest rate by 0.5 percentage points last month, the steepest and sixth rate hike since August last year. It is widely expected to raise the rate by 0.25 percentage point in a meeting later in the day.

Yonhap