Prices for goods and services traded among South Korean suppliers posted the highest increase in six years, indicating faster headline inflation in the near future, central bank data showed on Monday.
The producer price index (PPI) stood at 102.17 in January, up 1.3 percent from a month earlier, according to the Bank of Korea (BOK). It was the faster advance than any figure tallied in January in the past six years, keeping an upward momentum for six straight months.
From a year earlier, the index picked up 3.7 percent, the highest in over five years. The fast increase followed higher raw material prices in addition to soaring egg prices, which were caused by the spread of avian influenza especially among layer chickens that lay eggs.
The prices for agricultural, livestock and fishery products went up 4.0 percent in January from the previous month on the back of higher prices of livestock products that surged 6.3 percent. Egg prices skyrocketed 113.4 percent.
Prices for coal and oil products jumped 8.5 percent last month, raising the overall industrial products that saw the prices rise 1.9 percent in January from a month earlier. Diesel prices soared 59.0 percent, with other oil products recording double-digit increases.
Services prices inched up 0.3 percent, with those for electricity, natural gas and tap water making no change.
Higher producer prices indicate faster consumer price inflation in the foreseeable future, which is expected to put more pressure on the BOK into raising its record-low policy rate.
The BOK cut its benchmark rate from 3.25 percent in July 2014 to an all-time low of 1.25 percent in June last year.
The U.S. Federal Reserve hinted at three rate increases in 2017 after lifting the policy rate by a quarter percentage point in December. It would add pressures to the BOK's accommodative policy stance.
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