South Korea’s producer prices added 0.7 percent year over year in December led by strong agricultural and fishery product prices, snapping the five-month negative streak and raising hopes for a pickup in the country’s stubbornly low inflation.

The Bank of Korea said Tuesday its producer price index (PPI) rose 0.7 percent on year to 103.71 in December, its first gain in six months. Compared with the previous month, it was up 0.3 percent, ending a three-month losing streak.

PPI refers to the wholesale cost of goods and services and is considered a precursor of consumer price inflation.

Korea’s consumer price growth slowed to a record low in 2019, up a mere 0.4 percent, as the economy reported its weakest annual growth in a decade. The country’s central bank held its interest rate steady at a record low of 1.25 percent last week after delivering two rate cuts last year. With the latest pickup, expectations are growing that the country’s inflation may rebound this year.

Agricultural and fishery product prices jumped 4.0 percent on month. Radish prices surged 30.7 percent on reduced shipments from the extended autumn rainfall. Squid prices rose 11.9 percent due to poor catches.

Prices of industrial goods added 0.2 percent from the previous month, driven by coal and petroleum products, computers and optic devices. Rising international oil prices played a part, as the Dubai crude jumped 4.7 percent in December from the previous month to $64.9 a barrel. This drove up the cost of coal and petroleum products by 2.3 percent, lifting naphtha prices by 6.2 percent, diesel by 2.4 percent and petroleum by 3.5 percent.

Utility costs including electricity, gas, water and waste climbed 0.5 percent.

Service charges were unchanged from the previous month as the rise in the cost of restaurants, accommodation and real estate services were offset by a fall in transportation costs.

By Kim Hyo-jin

[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]