Import Prices Fall for Second Month: "US-Iran Peace Agreement Expected to Ease Upward Pressure"

International Oil Prices Ease Compared to Previous Month

Import Prices Decline for Second Straight Month After 18% March Surge

Still Nearly 25% Higher Than a Year Ago

Soaring Export Prices Expected to Remain Heavily Influenced by Semi

Import prices have declined for the second consecutive month. Following a sharp surge in international oil prices caused by the Middle East war, prices have eased compared to the previous month, resulting in two straight months of decreases after an 18% spike in March. However, import prices remain nearly 25% higher than during the same period last year. With the United States and Iran reaching an agreement to end hostilities, there are expectations that upward pressure on import prices will ease going forward.

Import Prices Fall for Two Consecutive Months... Up 24.8% Year-on-Year

According to the "Export and Import Price Index and Trade Index (Preliminary), May 2026" released by the Bank of Korea on the 16th, last month’s import price index based on the Korean won stood at 168.05 (2020=100), down 0.3% from the previous month. Compared to the same month last year, it jumped 24.8%.

The decline was led by mining products, coal, and petroleum products as international oil prices fell. The monthly average price of Dubai crude dropped by 2.4% to $103.15 per barrel in May from $105.70 in April. However, compared to the same month last year, this represents a 61.9% increase. The monthly average KRW-USD exchange rate rose by 0.2% from 1,487.39 won in April to 1,490.11 won in May.

By use, raw materials such as mining products, including crude oil, decreased by 1.0% from the previous month. Intermediate goods remained flat as declines in coal and petroleum products were offset by increases in primary metal products. Capital goods and consumer goods each rose by 0.3% month-on-month. Excluding exchange rate effects, import prices based on contract currency fell by 0.5% from the previous month and rose by 17.7% year-on-year.

Middle East Oil Facility Operations, Normalization of the Strait of Hormuz Key Factors

In June, with the United States and Iran reaching an agreement to end hostilities, it is analyzed that the upward pressure on import prices will also be alleviated. Lee Moonhee, Team Leader of Price Statistics at the Economic Statistics Department 1 of the Bank of Korea, pointed out, "The degree of relief will depend on how quickly international oil and other commodity prices stabilize and the movement of the KRW-USD exchange rate."

Up to June 12, before the ceasefire agreement, Dubai crude fell 11.8% from the previous month's average, while the KRW-USD exchange rate rose 2.3%. Lee added, "Even after the ceasefire agreement, the trend of oil and commodity prices and the KRW-USD exchange rate will depend on how quickly Middle Eastern oil facilities can return to normal operations and to what extent navigation through the Strait of Hormuz normalizes."

Semiconductors Drive Export Prices... Up 46.9% Year-on-Year

Last month, the export price index rose 0.3% from the previous month to 188.58. Compared to the same month last year, it surged by 46.9%. The rise was driven by computers, electronics, and optical equipment, including semiconductors, amid a slight increase in the KRW-USD exchange rate. The export price index for computers, electronics, and optical equipment (208.98) reached its highest point in 15 years and 10 months since July 2010 (217.32).

Among manufactured goods, coal and petroleum products declined, but computers, electronics, and optical equipment led by semiconductors, as well as primary metal products such as copper and aluminum, increased, resulting in a 0.3% rise from the previous month. Agricultural, forestry, and fishery products increased by 1.8% month-on-month. In May, export prices based on contract currency rose by 0.1% from the previous month and soared by 37.8% year-on-year.

Export prices are expected to be strongly influenced by semiconductor prices in June as well. Lee commented, "Investment demand for artificial intelligence (AI) remains robust, and supply expansion, especially for memory semiconductors, is insufficient compared to demand. This supply-demand imbalance is expected to continue driving up export prices for the time being." However, Lee also noted that monthly price fluctuations may occur depending on supply-demand conditions and contract progress.

The export volume index, which reflects changes in export and import volumes, increased by 14.7% year-on-year, driven by growth in computers, electronics, optical equipment, and primary metal products. Lee explained, "The continued growth in computers, electronics, and optical equipment, coupled with expanded AI-related investment, has increased demand for non-ferrous metals such as gold, copper, and aluminum, resulting in an even larger increase in exports of primary metal products compared to the previous month." The export value index soared by 56.8%.

During the same period, the import volume index rose by 5.2% year-on-year, led by increases in computers, electronics, optical equipment, machinery, and equipment. The import value index jumped 21.3%. The net barter terms of trade index and the income terms of trade index climbed 18.7% and 36.1%, respectively, compared to the previous year.

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