Last month, the import price index in South Korea fell for the third consecutive month, despite rising international oil prices, due to a decline in the won-dollar exchange rate.
According to statistics released by the Bank of Korea on September 15, the import price index (in won, provisional figure; 2020 level set at 100) stood at 156.32 in August, down 2.4% from July.
The import price index had previously dropped by 4.2% in June, marking the largest decline since November 2023 (-4.3%), and has now decreased for three straight months.
While the average monthly price of Dubai crude oil rose from $76.75 per barrel in July to $88.75 in August, the average exchange rate fell from 1,497.43 won in July to 1,406.30 won in August.
Raw material prices increased by 1.5% compared to the previous month, primarily driven by a rise in mining products (2.1%) due to higher crude oil prices. However, intermediate goods saw a decline of 4.0%, with chemical products (-6.1%) and primary metal products (-4.2%) contributing to the drop. Capital goods and consumer goods also fell by 4.2% and 4.4%, respectively.
Among specific items, prices for coffee (-9.3%), lithium hydroxide (-9.1%), system semiconductors (-6.1%), and mobile phones (-6.1%) decreased.
The export price index for August (in won) was 183.23, down 3.7% from the previous month, marking the lowest level in three years and eight months since December 2022 (-6.1%).
After a 1.0% increase in July, export prices turned downward in August, largely due to the impact of the falling exchange rate, despite increases in coal and petroleum products.
While coal and petroleum products rose by 0.3%, the overall industrial goods index fell by 3.7% due to declines in chemical products (-5.3%) and others.
Specific items that saw significant price drops included aluminum plates (-11.4%), secondary batteries (-6.4%), cosmetics (-6.1%), and synthetic fiber fabrics (-6.1%). However, diesel (2.8%) and jet fuel (2.4%) prices increased.
The trade index for August (in dollars) showed that the export volume index was 153.48, up 25.9% compared to the same month last year, marking ten consecutive months of year-on-year increases since November of last year.
The export value index (237.04) rose by 75.8% during the same period, driven by a continued boom in semiconductor exports, with the export volume index (+30.5%) and value index (+174.7%) for computers, electronics, and optical devices seeing significant increases.
Imports also saw increases, with the volume index (126.61) and value index (163.09) rising by 12.0% and 23.1%, respectively, compared to the same month last year.
The terms of trade index for goods (119.90) increased by 27.1% compared to August of last year, reflecting a significant rise in export prices relative to import prices. The increase was the largest since the statistics began being compiled in 1988. While export prices, particularly for semiconductors, rose sharply, the increase in import prices for mining products remained stable compared to the previous month.
The terms of trade index measures the ratio of the price of one unit of exported goods to the price of one unit of imported goods, providing insight into how much a country can import with a unit of export.
The income terms of trade index (184.02) also rose by 60.0% year-on-year, driven by increases in both the terms of trade index (27.1%) and the export volume index (25.9%). This marked the largest increase since the statistics were compiled.
Looking ahead, there is a possibility that import prices may rise significantly again in September due to the increase in international oil prices. Lee Heung-hoo, head of the price statistics team at the Bank of Korea, noted, "As of the 11th of this month, the exchange rate has fallen by 3.7%, while international oil prices have risen by 23.8%, creating mixed upward and downward pressures. However, due to the significant increase in international oil prices compared to the same month last year, it is highly likely that import prices will continue to see double-digit increases in September."
* This article has been translated by AI.
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