South Korea's producer prices fell by the most in more than three years in December mainly because the local currency sharply appreciated to the U.S. dollar, the central bank said Thursday.
The producer price index, a barometer of future consumer inflation, fell 1.2 percent in December from a year earlier, compared with a 0.9 percent on-year fall in November, according to the Bank of Korea (BOK). The December figure marked the largest fall since a 3.1 percent on-year fall in October 2009.
Compared with the previous month, the prices inched down 0.3 percent in December, smaller than a 0.7 percent on-month decline in November, the BOK said. For the whole of 2012, the producer prices grew 0.7 percent.
A BOK official said that despite a small gain in oil prices, the local currency's gain led the producer prices to decline as it made import costs cheaper.
In December, oil prices rose 0.8 percent from a year earlier, after inching down 0.6 percent on-year in November, according to the bank. The local currency appreciated an average of 6.54 percent to the dollar in December from a year earlier.
Last week, the BOK cut its 2013 outlook for consumer prices to
2.5 percent from its earlier estimate of 2.7 percent, an indication that the economic slowdown would ease upward pressure on consumer inflation.
The figures of the producer prices were all revised as the BOK changed the base year for the producer prices to 2010 from 2005.
The bank also added that it will adjust items and the weighting of the producer price index every year from the previous five years to better reflect price conditions. (Yonhap)
