Key facts
- South Korea's import price index fell 4.4% month-on-month in June.
- This is the sharpest on-month decline since December 2022.
- The drop was largely attributed to a 23% decrease in Dubai crude oil prices.
- Raw material prices decreased by 10.3% and intermediate goods by 3.2% in June.
- Export prices remained flat month-on-month.
South Korea's import prices experienced their steepest decline in three and a half years in June, falling by 4.4% from the previous month. This significant drop was primarily driven by a substantial decrease in oil prices, influenced by the ongoing Middle East conflict. The Bank of Korea's preliminary data indicated that the import price index's monthly fall was the sharpest since December 2022.
On a year-on-year basis, however, the import price index still showed a considerable increase of 20.6%. The decline in oil prices was marked by a 23% month-on-month drop in Dubai crude, which serves as South Korea's benchmark. This is particularly significant for the country, which relies heavily on energy imports.
The downward trend extended to other categories, with prices of raw materials falling 10.3% and intermediate goods dropping 3.2% in June compared to May. Import prices are considered a key indicator of inflation, impacting production costs and consumer prices across the supply chain.
In contrast, the export price index remained unchanged from the previous month. This stability was due to an increase in the prices of electronics products, which offset the decline in oil product prices, partly influenced by a weakening local currency. Despite the monthly stagnation, export prices were up 48.9% compared to a year earlier.