Producer prices in July were up 7.7% from a year earlier, the Bank of Korea said on the 21st. After staying in the 8% range for two straight months in May (8.6%) and June (8.5%), they fell into the 7% range. Producer prices are reflected in consumer prices with a lag.
However, some analysis says the increase could widen again in August. That is because international crude prices rose about 11% from the previous month during Aug. 1–19, and wholesale rates for industrial city gas were also raised 11%. A Bank of Korea official said, "The unstable situation in the Middle East is also likely to act as a factor pushing up producer prices."
According to the Bank of Korea's "preliminary producer price index for July" released that day, producer prices for manufactured goods rose 12.2%. After surging to 13.5% in May following the U.S.-Iran war, the pace of increase narrowed starting in June (13%).
Among manufactured goods, coal and petroleum products rose 50.7%. Brent crude, the international benchmark, was $70–$90 in July, holding above the pre-war level ($70). By item, solvent rose 190.2% and diesel rose 34.6%.
Among chemical products, sulfuric acid rose 258.7%, and among primary metal products, primary refined copper rose 50.9%. As global semiconductor demand expanded, price increases for DRAM (474.4%) and computer storage (290.7%) also pushed up producer prices.
Compared with the previous month, producer prices was shown to have declined 0.4%. It was the first decline in 11 months. This is attributed to base effects from unusually high producer prices in the previous month. In particular, services fell 0.4% as the domestic stock market trended lower in July. When share prices fall, securities firms' brokerage commissions decrease.