Producer prices rose for the second consecutive month last month. This was driven by increases in agricultural and livestock product prices, such as beef and cabbage, due to demand during the Chuseok holiday, as well as rising electricity rates following the end of the progressive rate discount for summer residential electricity bills.
As production cost burdens accumulate from rising intermediate goods prices, these factors are expected to exert upward pressure on consumer prices in the future.
According to the "Preliminary Producer Price Index for September 2026" released by the Bank of Korea on Wednesday, the producer price index last month stood at 129.78 (2020=100), up 0.2% from the previous month (129.58).
Producer prices had fallen by 0.4% in July before turning positive with a 0.1% increase in August, and have now continued their upward trend for two consecutive months. On a year-on-year basis, prices rose by 7.7%. The rate of increase was 0.2 percentage points lower than in August (7.9%).
By category, agricultural, forestry, and fishery products rose by 2.6% from the previous month. Prices for agricultural products (3.7%) and livestock products (2.7%) both increased due to heightened demand during the Chuseok holiday. In particular, cabbage prices surged by 42.9% in one month, while beef (10.4%) and turbot (7.5%) also saw significant price increases.
Prices for electricity, gas, water supply, and waste disposal rose by 1.3%. The impact of a 13.4% increase in residential electricity rates was substantial.
Lee Heung-hoo, head of the Price Statistics Team at the Bank of Korea, said, "It is a general pattern where prices rise as the progressive rate discount for residential electricity bills, which applied in July and August, ended in September," adding that this has little to do with international oil prices.
Prices for manufactured goods remained at the same level as the previous month. While chemical products (1.0%) and coal and petroleum products (0.9%) rose, prices for computers, electronics, and optical equipment (-1.7%) fell, offsetting the increases.
By specific item, naphtha (10.0%) and ethylene (8.2%) prices rose, while computer memory devices (-11.8%) and OLEDs (-4.0%) declined. It was explained that the decline in the won-dollar exchange rate had some impact on domestic producer prices, given that items such as DRAM and OLEDs are traded at international market rates denominated in dollars.
Service prices fell by 0.1% from the previous month. With the end of the summer peak season, hotel (-6.6%) and tourist accommodation facility (-15.8%) prices dropped, causing food service and accommodation service prices to fall by 0.6%.
Food prices rose by 1.1% and fresh food prices by 4.1% from the previous month, respectively. In contrast, producer prices excluding food and energy remained unchanged from the previous month.
Lee said, "While the month-on-month increase in producer prices this month was not large, intermediate goods such as coal and petroleum products and chemical products are showing high year-on-year rates of increase," adding, "As industrial city gas rates continue to rise, production cost burdens are accumulating, which is expected to exert upward pressure on consumer prices in the future."
Regarding October producer prices, he assessed that both upward and downward factors are mixed. Lee explained, "The fact that international oil prices have been falling until mid-this month is a downward factor," while noting, "Conversely, increases in industrial city gas wholesale rates and airline passenger fuel surcharges are expected to act as upward factors."
The domestic supply price index, which measures price changes for goods and services supplied domestically, recorded no change from the previous month. Raw material prices rose by 3.2%, but intermediate and final good prices fell by 0.3% each. On a year-on-year basis, the index rose by 8.5%.
The gross output price index, which includes exports in addition to domestic shipments, fell by 0.1% from the previous month due to factors such as declining export prices for manufactured goods. On a year-on-year basis, it rose by 14.7%.
in ECONOMY
