Import prices up in Sept. as strong dollar sends raw material costs higher

October 14, 2022


Korea's import prices increased for the first time in three months in September as the strong dollar drove up the costs of buying raw materials from abroad despite recently moderating crude oil prices, central bank data showed Friday.

The import price index stood at 154.38 in September, up 3.3 percent from a month earlier, according to the preliminary data from the Bank of Korea (BOK).

It was the first decline in three months following on-month falls of 2.6 percent and 0.9 percent in July and August, respectively. From a year earlier, the index was up 24.1 percent.

The won's fast slide against the U.S. dollar has led to an increase in the costs of importing key materials, more than offsetting the downward effect from recently moderating crude oil prices.

The won has fallen by around 17 percent against the dollar so far this year. The won's descent makes imports more expensive, the BOK said.

The data showed that raw material prices rose 3.4 percent on-month in September. Intermediate goods prices also increased 3.1 percent over the same period.

Prices of Dubai crude, South Korea's benchmark, stood at $90.95 per barrel on average last month, down 5.9 percent from the previous month. The oil prices were still up 25.2 percent from a year earlier.

Import prices are being closely watched as their upward move could lead to a rise in inflation pressure.

The country's consumer prices, a key gauge of inflation, rose 5.6 percent on-year in September, slowing from the previous month's 5.7 percent rise. The BOK expects inflation to stay in the 5-6 percent range for a considerable period of time.

On Wednesday, the BOK delivered the second big-step rate hike of a half percentage point, lifting the policy rate to 3 percent, the highest in about 10 years. The central bank cited the won's fast slide against the greenback as a reason for Wednesday's rate hike.

It was the eighth rate increase since August last year that represented a rise of a combined 2.5 percentage points as the BOK strives to bring inflation down. (Yonhap)

Selected articles from The Korea Times