South Korea’s producer prices hit 5-year high in September

Producer prices in South Korea continued to rise in September, with the Producer Price Index (PPI) – a barometer to gauge future consumer inflation – for the month at the highest level since August 2013.

September’s PPI reached 105.78 points, up 0.3% from the previous month, preliminary data from the Bank of Korea (BOK) revealed. Year-on-year comparison showed the PPI rising 2.7% higher.

September’s figure make it the highest level since August 2013, which saw the index hitting 105.81 points.

Prices of agricultural, forestry and marine products rose 1.5% from a month ago, while electric power, gas and water supply also saw prices rising 1.5%. Services saw prices rise by 0.1%.

Last week, South Korea’s central bank kept its monetary policy steady in its meeting, maintaining its benchmark seven-day repurchase rate at 1.50%, in line with expectations from economists. Central bank’s chief Lee Ju-yeol is said to be considering a rate hike for November’s monetary meeting.

South Korea’s economy is expected to continue its steady pace of growth this year, the country’s central bank said in a statement last week. Investments will slow but exports and consumption will show buoyancy, it added.

For this year and next year, the country’s central bank expects its economy to grow in the same pace, at 2.7%. BOK forecasts the global economy to sustain its trend of “modest improvement,” as growth continues for advanced economies such as the United States as well as for emerging economies.

Downside risks, such as protectionism and a “no-deal” Brexit remain, it had said.