Import prices plummet in March as commodities retreat

People shop at a discount mart in Seoul on Thursday. Korea’s import prices fell 6.9 percent in March, helped by a drop in oil prices. [NEWS1]

Import prices dropped 6.9 percent in March on year, the fastest fall in 27 months.

A drop in oil and raw materials prices helped drag down the index, measured in won, according to the preliminary data released by the Bank of Korea on Thursday.

Dubai crude fell 4.4 percent in March from a month earlier. On year, it was down 29.2 percent.

On month, import prices rose 0.8 percent, the second month in a row, due to weak won.

The won traded above 1,300 to the dollar last month from 1,220 in early February.

“A rise in import prices is a result of the weak won,” said Seo Jung-seok, head of Bank of Korea’s Price Statistics team. Excluding the impact of the currency volatility, “import prices fell 1.8 percent on month, and raw materials and intermediaries, capital and consumer goods price all dropped.

Raw material import prices fell 14.5 percent on year, while intermediary goods prices dropped 5.4 percent in the same period. Capital goods prices rose 5.0 percent, while consumer goods prices rose 2.0 percent.

Import prices are an essential factor in inflation.

Korea’s inflation was 4.2 percent in March, the lowest in a year. It was down from 4.8 percent in February. Inflation has been declining since hitting a 24-year high of 6.3 percent last July.

The Bank of Korea projects inflation to fall to a 3 percent range by the year end.

The central bank kept rates unchanged for the second time in a row on Tuesday, holding them at 3.5 percent.

Export prices last month were down 6.4 percent on year, and up 2.0 percent from a month earlier. A rise in chemical product and computer prices pushed up monthly export prices, despite a drop in coal and petroleum product prices, the Bank of Korea said.

Inflation also fell in the United States.

Inflation in the United States fell for the ninth consecutive month in March, the Bureau of Labor Statistics reported Wednesday. The plunge was helped by on-year comparisons to a period when food and energy prices soared amid Russia’s invasion of Ukraine.

Prices rose 5 percent last month, down from 6 percent in February, and lower than the 5.2 percent estimates by economists, according to Refinitiv.

The Federal Open Market Committee is scheduled to start a two-day rate-setting meeting on May 2.

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