South Korea Producer Prices Fall 0.4% in July

South Korea’s producer prices fell in July for the first time in nearly a year, as lower global crude oil prices helped offset rising agricultural costs caused by extreme summer heat.

The producer price index (PPI) declined 0.4% from June, marking its first month-on-month decrease in 11 months, preliminary data from the Bank of Korea showed Friday. Producer prices are closely watched as an early indicator of potential changes in consumer inflation.

Energy prices were a major contributor to the decline. The energy sector index dropped 3.6% from the previous month to 182.13, reflecting weaker global oil prices. Electric power prices decreased 1.7%, while several other energy-related categories also recorded declines.

Services prices fell 0.4% to 117.16. Financial and insurance activities posted a particularly sharp 7.1% decline, while air transportation costs dropped 4.7%. In contrast, accommodation and food service prices increased 1.0% during the month.

Manufacturing prices showed a mixed picture. Semiconductor prices climbed 3.7%, highlighting continued strength in the key chip sector, while electronic display device prices fell 2.7%. Non-ferrous metal products declined 2.4%, whereas basic steel product prices increased 0.6%.

Agricultural product prices rose sharply as a heat wave disrupted conditions during July, but the increase was not enough to outweigh declines in energy and other categories.

Broader price measures also weakened. South Korea’s domestic supply price index dropped 1.8% month-on-month to 136.43, while the total output price index decreased 0.2% to 142.77.

Despite the monthly decline, producer prices remained elevated compared with a year earlier. The PPI was 7.7% higher than in July 2025, although annual growth slowed from the 8.5% increase recorded in June.

The Bank of Korea calculates its producer price index using 2020 as the base year, with the benchmark index set at 100.