South Korean producer price inflation jumps

Year-on-year producer price inflation in South Korea hit 4.6 per cent in May, up from 3.2 per cent the month before. The central bank runs an inflation targeting policy, focused on consumer rather than producer prices, of 3 per cent +/- 1 per cent tolerance.

Producer prices are often an early indication of consumer prices. In this case, however, the change was driven largely by base effects (i.e. this time last year, prices fell 0.8 per cent month-to-month). The month-to-month price rise in Korea during May was only 0.5 per cent, actually a reduction on the month before.