Key facts
- South Korea's import prices fell 1% month-on-month in July, marking the second consecutive monthly decline.
- The decline was attributed to a 2% strengthening of the Korean won against the U.S. dollar and a 3.4% decrease in Dubai crude oil prices.
- On a year-on-year basis, the import price index increased by 18.7% in July.
- Export prices rose 1% month-on-month in July, primarily due to higher electronic prices, despite the strong currency.
Import prices in South Korea decreased for the second consecutive month in July, influenced by a stronger domestic currency and declining oil prices, according to preliminary data from the Bank of Korea. The import price index saw a 1% reduction from the previous month, following a more significant 4.2% drop in June. Despite the monthly decrease, import prices were still up 18.7% compared to July of the previous year.
The appreciation of the Korean won by 2% against the U.S. dollar during July played a key role in lowering import costs. Additionally, the price of Dubai crude, which serves as South Korea's benchmark oil, edged down by 3.4%. The data indicated mixed movements in commodity prices, with raw materials rising 0.8% while intermediate goods fell 2.2% month-on-month.
Import prices are considered a crucial indicator for inflation, as they directly impact production expenses and subsequently consumer prices across various supply chains. In contrast, export prices experienced a 1% increase in July from the prior month, largely driven by higher prices for electronic goods, even with the strong currency. On an annual basis, export prices surged by 49.1%.