Producer prices rise in July as rains hit agricultural sector

A person buys vegetables at a discount market in Seoul on June 4. [NEWS1]

Data from Korea's central bank on Wednesday showed that producer prices rose in Korea in July as unusually heavy rains during the monsoon season pushed up prices of agricultural products.

The producer price index, a key indicator of consumer inflation, rose 0.3 percent in July from the previous month, according to preliminary data from the Bank of Korea (BOK).

On an annual basis, the index rose 2.6 percent last month, after increasing 2.5 percent in the previous month. The index has recorded 12 consecutive months of year-on-year gains.

The increase is due to a 1.6 percent month-on-month increase in agricultural product prices and a 0.3 percent month-on-month increase in industrial goods prices.

Producer prices are one of the most important indicators of inflation trends because they influence the prices companies will charge consumers in the coming months.

Due to high prices for fruit and petroleum products, overall inflation in Korea increased in July, but remained below three percent for the fourth consecutive month.

Consumer prices, an important inflation indicator, rose 2.6 percent last month compared to the same period last year, according to data from the Korean Statistics Office. The previous month, they rose 2.4 percent.

This was the first time in six months that price increases accelerated.

Last month, the country's central bank froze its key interest rate at 3.5 percent for the twelfth consecutive month in response to falling inflation and high household debt.

The interest rate freezes came after the BOK made seven consecutive interest rate hikes from April 2022 to January 2023.

This week, the central bank is likely to leave its key interest rate unchanged again.

BY SHIN HA-NEE, YONHAP [[email protected]]