"Spinach Surges 52% in Heat Wave: Producer Prices Rebound After One Month"

Producer Price Index Up 0.2% in August from Previous Month
Heat Wave Pushes Up Prices of Agricultural, Forestry and Fishery Products by 3.8%
Oil Price Increase Reflected: Industrial City Gas Rates Also Rise 11%
Even Greater Upward Pressure

The domestic producer price index (PPI) turned upward after just one month. The shift was largely due to higher prices of agricultural, forestry, and fishery products such as spinach and pork—driven by the heatwave—as well as the rise in industrial city gas rates reflecting the increase in oil prices.

According to the "Provisional Producer Price Index for August 2026" released by the Bank of Korea on September 18, last month's PPI stood at 129.64 (2020=100), up 0.2% from the previous month. This marks a turnaround after a 0.4% decline the month before. Compared to the same month of the previous year, the index rose by 7.9%, continuing a steep upward trend since the Middle East war. The producer price index measures price changes of goods and services supplied by producers to the domestic market and typically affects consumer prices with a time lag.

The turnaround in the PPI last month was largely driven by a 3.8% increase in prices of agricultural, forestry, and fishery products due to the heatwave. Poor crop yields caused by intense heat resulted in a sharp 51.9% jump in spinach prices, while overall agricultural product prices jumped 4.9%. Pork prices also surged by 2.8%, as supply tightened due to mortality in livestock. The rise in oil prices led to an 11% increase in industrial city gas rates, pushing up the power, gas, water, and waste management category by 0.9%.

For manufactured goods, coal and petroleum products rose 0.4%, particularly for solvents and jet fuel, but electrical equipment (such as wiring harnesses) declined by 0.7%, leaving the overall sector unchanged from the previous month. As for services, restaurant and accommodation services—including hotels and bakeries—increased by 0.6%, but the financial and insurance services sector fell by 1.5%, as brokerage commission income decreased due to lower stock prices, keeping the overall service prices flat. Lee Heunghu, Team Leader of Price Statistics at the Economic Statistics Department 1 at the Bank of Korea, explained, "In cases such as brokerage commissions, where fees for intermediary services are determined by the value of the underlying asset multiplied by the commission rate, changes in the price of the underlying asset and commission rate directly affect the service price (fee per unit of underlying asset)."

In the vegetable collection center at Garak Wholesale Market in Songpa-gu, Seoul, cabbages brought up from the farming area are piled up.

Last month, the domestic supply price index declined by 1.3% compared to the previous month. This was due to the fall in the KRW/USD exchange rate and the decline in international oil prices in July, which led to a decrease in import prices based on customs clearance. Year-on-year, the supply price index was up 8.6%. The domestic supply price index measures price changes of goods and services supplied domestically and through imports to track the ripple effects of inflation. Lee added, "Prices of intermediate goods (-1.0%), raw materials (-4.6%), and final goods (-0.9%) all decreased, mainly due to lower import prices."

Total output prices in August decreased by 1.2% compared to the previous month. Manufactured goods fell by 2.0%, mainly due to lower export prices for chemical products and computer, electronics, and optical devices. Compared to the same month of the previous year, the total output price surged by 15.2%. The total output price index measures price changes of goods and services including exports in addition to goods supplied domestically, in order to assess broad changes in domestic production prices.

This month, the producer price index is likely to face even greater upward pressure. Lee said, "The renewed conflict in the Middle East has caused a sharp rise in international oil prices. The wholesale rate for industrial city gas was also raised in September, acting as an additional upward factor." As of September 16, the average price of Dubai crude oil had soared by 29% compared to the previous month’s average. This month, the wholesale rate for industrial city gas has been raised by 6.6%.

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