As International Oil Prices Stabilize After Surge... Import Prices Experience Largest Drop in Three and a Half Years

Import Prices Fall 4.4% in June... Largest Drop in Three and a Half Years

Oil Prices Return to Pre-war Levels... But Exchange Rate Trends Still Matter

"Consumer Price Burden Expected to Ease Somewhat"

Import prices saw their largest drop in three and a half years. The downturn, led by declines in international oil prices amid the U.S.–Iran ceasefire negotiations, was particularly pronounced for mineral products as well as coal and petroleum products. However, it remains to be seen whether this downward trend in import prices will continue this month. This is because, although the average price of Dubai crude oil has returned to pre-war levels, the won-dollar exchange rate is rising, and recent tensions surrounding the war in the Middle East have increased uncertainty. Even so, the upward pressure on consumer prices is expected to ease.

Import prices fall 4.4%... Largest drop in three and a half years

According to the "Provisional Export and Import Price Index and Trade Index for June 2026" released by the Bank of Korea on the 15th, last month’s won-based import price index stood at 161.34 (2020=100), a decrease of 4.4% compared to the previous month. This marks the largest decline since December 2022 (-6.5%), or three and a half years.

Driven by the fallout from the Middle East war in March, import prices jumped 18.0% month on month, then dropped by 2.1% in April, edged up by 0.2% in May, and once again turned downward in June due to falling international oil prices following the ceasefire. The average monthly price of Dubai crude oil dropped dramatically from USD 103.15 per barrel in May to USD 79.45 in June, a decrease of 23.04% from the previous month. Compared to the same month last year, this reflects a 14.7% increase. Meanwhile, the average monthly won-dollar exchange rate rose from 1,490.11 won in May to 1,527.30 won in June, a 2.5% increase. Despite the recent decline, import prices were still up sharply year-on-year by 20.6%, especially for mineral products and chemical products.

By usage category, raw materials fell sharply by 10.3% from the previous month, mainly due to an 11.3% drop in mineral products such as crude oil. Intermediate goods declined 3.2% month on month as a result of a 19.0% drop in coal and petroleum products such as naphtha and bunker C oil, and a 3.3% drop in chemical products such as propylene and butadiene. Capital goods and consumer goods each rose by 1.6% from the previous month. Excluding the exchange rate effect, import prices based on contract currencies fell by 6.4% compared to the previous month, but increased 9.5% year on year.

Oil prices return to pre-war levels... But exchange rate trends still matter

Whether this downward trend in import prices will continue into July remains uncertain. Moonhee Lee, Team Leader of the Price Statistics Team 1 at the Bank of Korea’s Economic Statistics Department, noted, "From the 1st to the 13th of this month, the average price of Dubai crude oil fell slightly below the pre-war average of February this year, but the won-dollar exchange rate is rising and ongoing tensions in the Middle East are intensifying, making it difficult to predict the import price trend for July." The average won-dollar exchange rate from July 1–13 edged up by 0.2% from the previous month's average and rose by 11.3% compared to the same period last year.

However, the burden of higher prices on consumers is expected to ease. Lee explained, "If you look at the import price of consumer goods in June, both the month-on-month and year-on-year rises have grown, mainly due to the higher won-dollar exchange rate. However, the upward trend for raw materials and intermediate goods has slowed year on year and fallen month on month, so the burden on consumer prices is expected to ease somewhat going forward." The degree of this effect will depend on factors such as the time lag for raw material and intermediate good prices to be reflected in consumer prices.

On the 14th, employees are monitoring the stock market and exchange rates in the dealing room at the Hana Bank headquarters in Jung-gu, Seoul.

Export price growth at the lowest in 12 months

The export price index for last month was 188.90, unchanged from the previous month (0.0%). This is the lowest rate seen in 12 months since June 2025 (-1.2%). The increase in the won-dollar exchange rate and higher prices for computers, electronics, and optical devices were offset by declines in coal and petroleum products. However, year on year, export prices still showed a steep increase of 46.9%, the largest since March 1998 (57.1%) in the past 28 years and three months.

Among manufactured goods, coal and petroleum products, including diesel and jet fuel, fell by 13.9%, while prices of items such as semiconductors, computers, electronics, and optical devices rose by 4.5%, resulting in an overall flat outcome compared to the previous month. Agricultural, forestry, and fisheries products rose by 4.2% from the previous month, driven by a 10.6% jump in fruit prices. Export prices based on contract currencies fell by 2.2% compared to the previous month, but surged 34.1% year on year.

The narrowing of the increase in semiconductor prices compared to the previous month is attributed more to timing differences rather than a 'price peak-out.' Lee explained, "Since most contracts are made quarterly, many were signed in April, but as we reached June, the extent of fluctuations in contract prices diminished. However, there is continued excess demand for semiconductors, so there may be changes when contracts are renewed for the third quarter."

The export volume index—which tracks changes in export quantities—jumped 29.8% year on year due to increases in semiconductors, computer memory devices, mobile phones, computers, electronics, optical devices, and primary metal products. This is the steepest gain in 16 years and five months since January 2010 (42.0%). The export value index soared by 74.8% in the same period.

During this time, the import volume index rose by 12.0%, led by increases in computers, electronics, optical devices, machinery, and equipment. The import value index jumped by 30.5%. The Net Terms of Trade Index and the Income Terms of Trade Index rose by 15.6% and 50.0%, respectively, compared to the same month last year.

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