High oil prices coincide with Chuseok peak season ... September producer prices rise 0.2% for second straight month

[Financial News]  Producer prices continued to rise for a second consecutive month in September. Concentrated demand for the Chuseok holiday and the end of the summer discount on progressive electricity rates pushed prices up. Rising global oil prices also significantly drove up prices of petroleum products and wholesale prices of industrial city gas, which are expected to put pressure on consumer prices going forward.
According to the BOK on the 21st, the preliminary September producer price index rose 0.2% from the previous month and 7.7% from the same month a year earlier.
Producer prices rose from March this year, then were flat in June (0.0%) and fell in July (-0.4%), before rising for a second consecutive month in August (0.1%) and September (0.2%). Compared with the same months a year earlier, prices have remained high, in the 7% to 8% range, since early this year.
By category, food prices rose sharply in September amid the Chuseok holiday. A surge in demand for ancestral rite offerings and gifts pushed up prices of agricultural products, including cabbage, by 3.7% from the previous month. Livestock products, including beef and pork, also jumped 2.7%. Overall prices for agricultural, forestry and fishery products rose 2.6% from the previous month.
In the public utilities and energy sector, residential electricity prices surged 13.4% from the previous month after the summer discount on progressive residential electricity rates ended. As a result, prices for electricity, gas, water and waste rose 1.3% from the previous month.
Manufactured goods prices were unchanged from the previous month (0.0%). Among major items, chemical products such as ethylene edged up 1.0%, while prices for computer, electronic and optical equipment, including computer memory and OLEDs, fell 1.7%.
Service prices fell 0.1% from the previous month as restaurant and accommodation services declined 0.6%.
The September domestic supply price index, which includes imported goods, was unchanged from the previous month (0.0%).
Raw material prices (3.2%) rose for both imports and domestic shipments, but intermediate goods (-0.3%) and final goods (-0.3%) fell due to lower import prices, helping keep the overall index in check.
Lee Heung-hu, head of the BOK’s Price Statistics Team, forecast, “Accumulated cost pressures, including higher industrial city gas prices and airline fuel surcharges due to rising global oil prices, will act as a factor pushing consumer prices higher going forward.”
The September total output price index, which combines domestic shipments and exports, fell 0.1% from the previous month. This was due to lower export prices for manufactured goods (-0.9%), particularly computer, electronic and optical equipment.
[email protected] Jeong Sang-gyun Reporter