Surging Oil Prices and Rising Stocks Drive Producer Price Index Up for Six Consecutive Months

Producer Price Index Rises 0.6% in February from Previous Month
Petroleum Products Reverse Decline; Notable Increases in Financial and Insurance Services
Bank of Korea: "Sharp Rise in International Oil Prices in March Likely to Affect Consumer P

Domestic producer prices have risen for six consecutive months, driven by a sharp increase in international oil prices and the impact of rising stock prices.

According to the "Producer Price Index (Preliminary) for February 2026" released by the Bank of Korea on the 24th, the producer price index for February stood at 123.25 (2020=100), up 0.6% from the previous month. Although the increase narrowed slightly from the previous month's 0.7% rise, it marked the sixth consecutive monthly increase since September last year. This is the longest period of consecutive increases since December 2023 to May 2024. Compared to the same month of the previous year, the index rose by 2.4%.

The producer price index is a statistic that measures price changes for goods and services supplied by producers to the market, and it is typically reflected in consumer prices with a lag of about one to three months.

By category, prices of agricultural, forestry, and fishery products increased by 2.4%, with agricultural products up 2.4%, livestock products up 2.2%, and fishery products up 4.2%. Industrial products rose by 0.5% from the previous month, driven by coal and petroleum products, which climbed 4.0% due to higher international oil prices, and primary metal products, which rose 0.8%. For the service industry (up 0.6%), prices surged mainly in the financial and insurance sector, which increased by 5.2%. This was attributed to higher commission fees for consignment trading as a result of rising stock prices.

In particular, coal and petroleum products, which had declined for two consecutive months, reversed course and rose this month. While international oil prices (based on Dubai crude) had fallen by 0.1% month-on-month in January, they surged by 10.4% in February, significantly impacting prices. Semiconductor prices also rose by 2.9% from the previous month in February, but the pace of increase slowed compared to January's 14% rise.

Among specific items, large price increases were seen in bell peppers (36.9%), squid (12.1%), diesel (7.4%), naphtha (8.7%), DRAM (7.8%), and consignment trading commissions (14.8%).

In March, the impact of international oil prices on producer prices could become even greater. As of March 20, the average price of Dubai crude had soared by 82.9% compared to the previous month's average. The won-dollar exchange rate also rose by 2.0% during the same period. Moonhee Lee, head of the Price Statistics Team 1 at the Economic Statistics Department of the Bank of Korea, said, "This steep rise will exert upward pressure on producer prices. However, the extent of the impact will vary depending on how much of the increase in the cost of petroleum and chemical products is passed on by companies."

There are also concerns that, with producer prices rising for six consecutive months and international oil prices soaring, this could lead to higher consumer prices. Regarding this, Lee added, "The recent increase in oil prices is already partially reflected in retail prices, such as those for gasoline and diesel at gas stations. The rise in international oil prices in February and the sharp increase in March will also have some impact on consumer prices."

However, Lee noted, "The speed at which these increases are reflected in consumer prices could be affected by policies such as the implementation of maximum price caps on petroleum products. The time lag before these increases are passed on to consumers can differ depending on market conditions, government policies, and corporate management decisions."

Meanwhile, the domestic supply price index, which measures price changes including imported goods, rose by 0.5% from the previous month, mainly due to domestic shipments. Raw materials increased by 0.7%, intermediate goods by 0.6%, and final goods by 0.2%, as a drop in capital goods was offset by higher prices for services and consumer goods. The total output price index, which combines domestic shipments and exports, rose by 0.9% from the previous month, with industrial products (up 1.1%) and services (up 0.6%) leading the increase.

This content was produced with the assistance of AI translation services.