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Producer prices skyrocketed in February due to a rise in the raw materials prices, fanning worries over growing inflationary pressures and worsening corporate profits. The Bank of Korea (BOK) announced Friday that the producer price index (PPI) jumped 4.5 percent year-on-year in February, the highest monthly rise since November 1998 when it hit 11.0 percent growth. The figure also marks the eighth consecutive months of gains.
Month on month, the PPI also grew 1.2 percent following 1.4 percent growth in January. Soaring producer prices would result in consumer price hikes in the coming months, which in turn squeeze enterprise operations. Local manufacturing companies are already feeling the effects of surging global prices of raw materials as evidenced by the BOK's Business Survey Index (BSI) for February plunging to a three year low of 77, raising fear that this might further freeze the already weak consumer sentiments and derail economic recovery.
Manufacturing goods prices crept up 1.7 percent from the prior month owing to rising oil and petrochemical products.
Prices of agricultural, forestry, fishery and livestock products jumped 3.2 percent last month from the month before, due to reduced supply after the lunar new year while service fees edged up 0.2 percent.
Meanwhile, deputy prime minister for Finance and Economy Lee Hun-jai said in a regular briefing Thursday, "If the raw material price growth rises from 3 percent, as originally estimated, to 6 percent, it would push up the annual inflation rate by 0.3 percentage point, while cutting the economic growth rate by 0.2 percentage point." BOK currently estimates the Korean economy and consumer prices would grow 5 percent and 3 percent this year respectively.
(Lee sae-min, johnlee@chosun.com )
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