109.6… Highest increase in 10 years
Consumer price inflation pressure this year
It is expected to jump more than 3% in the first half
The producer price index jumped 6.4% last year due to rising oil and raw material prices and supply disruptions. This is the largest increase in 10 years. As producer prices, which have an impact on consumer prices, soared with a time lag, consumer prices in the first half of this year are also expected to rise by more than 3% following the end of last year.
According to the Bank of Korea on the 20th, the average producer price index (based on 100 in 2015) from January to December last year was 109.6, up 6.4% from a year ago (103.03). This is the highest record in 10 years since 6.7% in 2011. The index itself is at the highest level since statistics were compiled in 1965. The previous high was 106.44 in 2012.
The producer price index is an index showing the price fluctuations of goods and services supplied by domestic producers to the domestic market, and is used as a leading indicator of consumer price. The higher the index, the higher the selling price of producers. Producer prices usually affect consumer prices with a lag of about one month. This means that consumer prices, which soared to the 3% level for three consecutive months from October to December last year, will continue to face upward pressure this year. The core producer price, excluding food and energy, rose 6.4% last year from a year earlier. During the same period, food sales rose 5.9%, fresh foods rose 1.9%, energy 11.3%, and information technology (IT) rose 3.4%.
The producer price index for the month of December last year was 113.22, similar to November (113.23) due to the drop in oil prices. The rate of change from the previous month was close to 0%, so the BOK judged it to be ‘consolidated’ rather than ‘down’. However, compared to a year ago, it is still 9.0% higher. From November 2020 to November last year, the Producer Price Index increased for 13 consecutive months compared to the previous month.
By Kim Seung-hoon
