By Kim Jae-kyoung
Staff Reporter
The nation's producer prices grew at the quickest pace in 10 years in July, propelled by the persistence of high-flying oil and raw materials costs.
The Bank of Korea (BOK) reported Friday that wholesale price gains surged 12.5 percent in July, compared with 10.5 percent a month ago.
It was the biggest year-on-year increase in 10 years since July 1998 when prices soared 12.8 percent.
What is of more concern is that the growth pace has been accelerating since last September. Prices increased 6 percent in March, 7.6 percent in April, and 9 percent in May.
``International oil prices turned downward since mid June, but the average oil price for the last month rose 88.4 percent from a year ago, which was the key reason behind a surge in producer prices last month'' BOK economist Youn Jae-hoon said.
``Given oil prices have been on a downward trend for the past month, it is highly probable that producer price gains will lose momentum in the months to come,'' he added.
Prices for manufactured goods jumped 17.9 percent last month from a year before, the highest level since April 1998 when it grew 18 percent. Prices for electricity and water grew 4.6 percent.
Prices for agricultural and fishery products turned upward due to a rise in vegetable and fruit prices, growing 1 percent year-on-year.
In a desperate bid to keep high inflation in check, the central bank increased its base rate by 25 basis points to 5.25 percent, the first rate move in 12 months.
The central bank kept the base rate, the benchmark seven-day repurchase agreement rate, unchanged for a year after two rate hikes of a total of 50 basis points in July and August last year.