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Producer prices rise for a second straight month as agricultural products jump

Published: 21 Feb. 2024, 16:33

JIN MIN-JI
[email protected]

Producer price index in Korea rose for a second straight month in January led by a price jump in agricultural products, especially fruits, the Bank of Korea said Wednesday. Fruits are displayed in a supermarket in Seoul. [YONHAP]

Producer prices rose for second straight month in January led by a price jump in agricultural products.

The producer price index (PPI) rose 0.5 percent last month from a month earlier, accelerating from a 0.1 percent increase in December, according to Bank of Korea (BOK) data released on Wednesday. The January figure grew 1.3 percent on a yearly basis.

PPI is a major barometer of consumer inflation that determines the inflation's trajectory as it affects the prices that businesses charge their customers in months ahead.

The prices of agricultural products soared 8.3 percent on month in January, led by fruits like apples and tangerines, while those of marine products inched up 0.2 percent over the same period. Prices of livestock products fell 1.3 percent.

Prices of industrial products inched up 0.1 percent on month while those of electricity, gas, water and waste advanced 1 percent in the same period, led by a jump in industrial city gas.

The production of fruits like apples decreased last year due to harvest depression last year, according to the Bank of Korea. An insufficient amount of fruit storage further pushed up the prices of seasonal fruits like tangerines.

Korea’s consumer prices, a key gauge of inflation, fell below 3 percent for the first time in six months in January to reach 2.8 percent from a year earlier. That figure had stood at 3.2 percent a month earlier.

Inflation has been gradually decelerating after reaching its peak of 6.3 percent in July 2022.

The Korean central bank has kept the target interest steady at 3.5 percent for longer than a year as inflation moderates.

The BOK’s Monetary Policy Board is scheduled to hold a rate-setting meeting on Thursday, where they are expected to stay pat for the ninth straight time.

The Korea Financial Investment Association (Kofia) said Tuesday that 100 percent of bond experts, including analysts, expect the BOK’s board to freeze the rate since the consumer price index in the United States rose more than it was expected to in January.

The figure came to 3.1 percent on a yearly basis, surpassing its projected gain of 2.9 percent.

Bond experts, surveyed for a week from Feb. 8, expect the BOK's board to unanimously vote to freeze the rate.

BY JIN MIN-JI [[email protected]]