▲ Import and export freight is piled up at Pier Sinseondae of Busan Port.
Import prices fell for the second consecutive month in July as the won-dollar exchange rate and international oil prices declined.
Despite the drop in the exchange rate, export prices rose as semiconductor prices continued their upward trend.
According to the export and import price index statistics released by the Bank of Korea on August 14, the import price index (based on the Korean won, preliminary, 2020=100) stood at 160.09 last month, down 1.0% from June (161.71).
The import price index dropped by 4.2% in June, marking the largest decline since November 2023 (-4.3%), and continued to fall for two months in a row.
The magnitude of the decline in the July index narrowed compared to the previous month.
By item, intermediate goods such as coal and petroleum products (-3.9%), primary metal products (-3.8%), and computer, electronic and optical products (-2.2%) saw sharp drops.
Among detailed items, crude oil (-4.8%), propane gas (-25.2%), and system semiconductors (-9.9%) drove the decline.
Kim Min-sun, head of the Price Statistics Team at the Bank of Korea, said, "Import prices fell mainly centering on coal and petroleum products and primary metal products as the exchange rate and international oil prices declined in July," adding, "However, based on the contract currency excluding the exchange rate effect, prices rose 0.9% from the previous month."
The average won-dollar exchange rate in July was 1,497.43 won, down 2.0% from June (1,527.3 won).
Dubai crude oil prices also averaged 76.75 dollars per barrel in July, down 3.4% from the previous month (79.45 dollars).
Regarding the price outlook for August, she said, "Although the average exchange rate from the 1st to the 12th of this month fell by about 5% compared to the previous month, oil prices rose 7.3% from the previous month as Middle East tensions flared up again, leaving both upward and downward factors mixed for now."
The export price index for July (based on the Korean won) rose 1.0% from the previous month to 190.65.
After falling 0.1% in June, it rebounded in a month.
Despite lower exchange rates and oil prices, export prices rose as the prices of computers, electronics, and optical products, including semiconductors, maintained an upward trajectory.
Among manufactured goods by category, computers, electronics, and optical products rose 4.8%, and coal and petroleum products also increased by 4.8%.
By detailed item, computer storage devices (+17.6%), DRAM (+6.6%), diesel (+11.2%), and naphtha (+6.2%) led the increases.
As for the July trade index (based on the U.S. dollar), the export volume index stood at 153.33, up 20.0% from the same month last year.
Although the rate of increase narrowed compared to June (+29.6%), it marked a year-on-year increase for the ninth consecutive month starting last November.
The export value index (233.11) also surged 64.2% over the same period.
This was the result of a sharp increase in the export volume index (+25.2%) and value index (+154.2%) for computers, electronics, and optical products amid a sustained semiconductor export boom.
For imports, the volume index (135.27) and value index (174.03) rose 14.7% and 25.8%, respectively, compared to the same month last year.
The net terms of trade index (118.17) increased by 24.7% from the same month last year.
This is because export prices (36.8%) rose much more sharply than import prices (9.7%) over the same period.
The net terms of trade index is the ratio of a unit price of exports to a unit price of imports, serving as an indicator to gauge how many goods South Korea can import with a single unit of exports.
The net terms of trade index for July was the highest in 18 years and 10 months since September 2007 (119.59).
The month-on-month increase was the largest since statistics began to be compiled in 1988.
Regarding this, Lee Heung-hoo, head of the Price Statistics Team at the Bank of Korea, stated, "As the upward trend in semiconductor prices continued, the increase in export prices widened while the rise in import prices narrowed compared to a year earlier due to lower international oil prices and exchange rates, significantly improving the terms of trade," adding, "It can be seen that our corporate export competitiveness has strengthened and external purchasing power has also improved."
The income terms of trade index (181.19) climbed 49.7% year-on-year as both the net terms of trade index (24.7%) and the export volume index (20.0%) rose.
(Photo: Yonhap News)
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