Rise in PPI was 8.4% in 2022, highest since 2008

Economy

Published: 20 Jan. 2023, 13:57

Rise in PPI was 8.4% in 2022, highest since 2008

Agricultural products at a discount mart in Seoul on Dec. 22. The Producer Price Index rose 8.4 percent last year, the highest jump since 2008. [YONHAP]

The Producer Price Index (PPI) soared 8.4 percent last year, the biggest jump in more than a decade.

The PPI measures the average change over time in selling prices charged by domestic producers for their output.

According to Bank of Korea Friday, the PPI's 8.4 percent growth reflected higher prices of coal and petroleum goods and utility charges, like electricity, gas and water. The PPI for coal and petroleum products jumped 55 percent on year, while utility charges rose 20.9 percent.

The PPI for agricultural products was down 2.6 percent.

Last year's rise was the steepest since 8.6 percent in 2008.

In December, the PPI grew 6.0 percent on year compared to 6.2 percent a month earlier. Growth slowed for six months in a row.

“The price of agriculture and fishery products rose but the price of industrial goods fell due to the decrease in international oil price and [the value of the] dollar,” said Seo Jung-seok, a spokesperson for Bank of Korea.

The price of West Texas Intermediate (WTI) crude oil was $80.73 on Jan. 19 after trading at around $120 last June. The won is trading at around 1,230 won, down around 15 percent from a peak last October.

The price of agricultural products rose 1.5 percent on year in December, but jumped 4.9 percent compared to a month earlier.

“The price of agricultural products rose centered on cucumbers and pumpkins as the cold winter raised heating costs,” said Seo. “Prices of seafood also rose due to a reduced catch of certain types of fish like mackerel.”

Cucumber prices soared 75 percent, and pumpkin 73.8 percent in December from a month earlier. Fish prices jumped 10.1 percent in the same period.

The central bank said tackling inflation will be the focus of its monetary policy this year.

“Core inflation, which excludes food and energy, is expected to continue to slow with increasing downward pressure on the economy, just as in other major countries,” said the Bank of Korea. Gov. Rhee Chang-yong at a press conference Wednesday. “However, the trend of Korea’s headline inflation slowdown may be different. This is because of the delayed pass-through of last year’s international oil price hike into the CPI measure.”

Charges for energy utilities such as electricity and gas rose only 13 percent in Korea, compared to over 40 percent in Europe.

The PPI serves as a leading indicator for the CPI. When producers face input inflation, the increases in their production costs are passed onto retailers and ultimately consumers.

BY JIN MIN-JI [jin.minji@joongang.co.kr]