Ships pass through the Strait of Hormuz as seen from Musandam, Oman. [Reuters]
Ships pass through the Strait of Hormuz as seen from Musandam, Oman. [Reuters]

South Korea's producer prices were flat last month, ending nine consecutive months of gains. Falling oil prices pushed down petroleum product costs, but secondary spillover effects drove up prices in other categories, offsetting the decline.

The Bank of Korea's preliminary producer price index data for June 2026, released Wednesday, showed the index recorded zero growth from the previous month. Producer prices had risen steadily since September last year, when they climbed 0.4 percent, making last month's flat reading the first break in that run in 10 months.

"Coal and petroleum products and chemical products fell, but computers, electronics and optical equipment, and financial and insurance services rose, resulting in an overall flat reading from the previous month," said Lee Moon-hee, head of the Bank of Korea's price statistics team.

Breaking down the figures by category, agricultural, forestry and fishery products rose 0.7 percent from the previous month, driven by a 2.1 percent increase in livestock products — led by pork, which jumped 4.3 percent — amid a continuing disease outbreak. Electricity, gas, water and waste services rose 1 percent, as industrial city gas prices climbed 10.6 percent following a wholesale rate hike tied to higher input costs. Services edged up 0.2 percent, with financial and insurance services rising 2.5 percent on the back of a 6 percent increase in brokerage commissions as share prices rose.

Industrial goods, by contrast, fell 0.3 percent. Coal and petroleum products dropped 5.3 percent, with naphtha down 23.5 percent and jet fuel off 23.4 percent, while chemical products declined 1.8 percent, including ethylene down 18.9 percent and polyethylene resin down 10.2 percent, all reflecting the fall in international oil prices.

Even with producer prices flat, consumer inflation is expected to keep rising. "Producer prices have stopped climbing month-on-month, but the secondary spillover effects from the Middle East war appear to be continuing, and that will act as an upward factor on consumer prices for now," Lee said. He added that the non-energy component of the special classification index held steady month-on-month but maintained a year-on-year gain of 8.2 percent in June, matching May's pace. "Since the Middle East war, rising oil and raw material prices have been feeding through with a lag, keeping non-energy items well above year-earlier levels — and that is continuing to act as an upward pressure," he said.

For this month, upward and downward forces on producer prices appear evenly balanced. Lee noted that Dubai crude prices averaged 10 percent below the previous month's level from July 1 through Monday, and that fuel surcharges on air cargo and passenger services had been cut. At the same time, he cited upward risks including a resumption of armed conflict between the United States and Iran and a wholesale rate increase for industrial city gas. "Upward and downward factors are mixed. The overall direction will need to be assessed once all the data are in," he said.

The domestic supply price index, which combines producer and import prices to reflect changes in the cost of goods and services, rose 0.7 percent from the previous month and was up 13.2 percent from a year earlier. Intermediate goods, raw materials and final goods rose 0.5 percent, 2.1 percent and 0.5 percent, respectively, with imports the primary driver across all three categories.

The total output price index, which covers both domestic shipments and exports, rose 0.4 percent from the previous month, as industrial goods gained 0.4 percent on export-led gains in computers, electronics, optical equipment and chemical products. The index was up 17.6 percent from a year earlier, setting a new record high since the series began in 2010 and surpassing the previous record set just a month earlier.


kimstar@heraldcorp.com