Coronavirus oil prices fall Last year, producer prices fell after 4 years

Enter 2021.01.21 06:00

International oil prices fall by 33%… Coal, petroleum, and chemical products plummeted at once
Annual domestic supply price reflecting import price -2.3%… 19% of raw materials ↓

Last year, the producer price index turned downward after four years. International oil prices have fallen by more than 30% in a year due to the outbreak of a novel coronavirus infection (Corona 19). It is analyzed that the aftermath of the downturn was significant as the proportion of oil-related items exceeded 10% when calculating the price of Korean producers.

According to the’December 2020 Producer Price Index’ released by the Bank of Korea on the 21st, the producer price index last year was 103.02, down 0.5% from the previous year. It has been 4 years since 2016 (-1.8%) that producer prices have fallen.

It was international oil prices that lowered producer prices last year. With the annual average Dubai oil price falling 33.4% year-on-year to $42.29, the prices of producers of related items fell sharply at once. As a result, coal and petroleum products fell 25.3% and chemical products fell 5.2%. It is a diagnosis that the two items led the downtrend as the proportion of the two items in calculating producer prices reached 12%.

Last year, agricultural, forestry and fishery products rose 9.6%, mainly for agricultural products (10.7%) and aquatic products (14.0%), but did not offset the decline in international oil prices. Last year, service producer prices also rose 1.3%, centering on business support (3.0%), information and communication and broadcasting (1.4%), and transportation (1.2%).

The domestic supply price index, which is the annual standard producer price index plus the import price, fell 2.3% to 102.29. This is also a decline in 4 years since 2016 (-2.7%). The impact of the large drop in raw materials (-18.5%), mainly imported (-25.7%), was reflected. In addition, the total output price index (101.21) including export prices in the producer price index declined 1.6% for the second consecutive year.

An official from the BOK said, “With the outbreak and spread of Corona 19, the prices of raw materials including international oil prices have fallen significantly, and producer prices have also fallen.” “International oil prices greatly affect coal, petroleum products, and chemical products. The proportion is quite large,” he said.

Last year, monthly producer prices have risen for two consecutive months since November. As of December, the producer price was 103.78, up 0.7% from the previous month. The impact of coal and petroleum products (11.0%) rose for the second month was reflected. Chemical products (1.2%) rose for 7 consecutive months. Agriculture, forestry and fishery products also rose 2.3% due to the increase in agricultural products (5.9%), and electricity, gas, water, waste and services also rose 0.6% and 0.2%, respectively.