Import prices post biggest drop in 3.5 years as global oil prices fall

South Korea's import prices fell at their fastest pace in three and a half years last month as global oil prices dropped 23%, with the third consecutive monthly decline expected to ease upward pressure on consumer prices going forward.

The Bank of Korea released its preliminary report on export and import price indexes and trade indexes for June 2026 on Wednesday, showing import prices measured in won fell 4.4 percent from the previous month — the steepest drop since December 2022, when they fell 6.5 percent. Import prices have now declined for three consecutive months since April. Compared with the same month a year earlier, they were up 20.6 percent.

"Import prices fell 4.4 percent from the previous month, driven mainly by mining products and coal and petroleum products, as international oil prices declined," said Lee Moon-hee, head of the Bank of Korea's price statistics team.

The monthly average price of Dubai crude fell to $79.5 per barrel in June, down 23 percent from $103.2 the previous month.

Breaking down by end use, raw material prices fell 10.3 percent from the previous month, led by a 20.7 percent drop in crude oil and an 11.3 percent decline in mining products overall. Intermediate goods fell 3.2 percent, with coal and petroleum products down 19 percent — including naphtha, which fell 25.5 percent, and bunker C oil, which dropped 19.2 percent — and chemical products down 3.3 percent, including styrene monomer, which fell 19.9 percent. Capital goods and consumer goods each rose 1.6 percent.

On the July outlook, Lee said Dubai crude prices from July 1 through Monday had slipped slightly below the February average — the level before the Iran war — but that a firm prediction was difficult given a rising won-dollar exchange rate and renewed tensions surrounding the Middle East war. The won-dollar exchange rate edged up 0.2 percent from the previous month between July 1 and Monday, and was up 11.3 percent compared with the same period a year earlier.

On the potential impact of falling import prices on consumer prices, Lee said the year-on-year increase in raw material and intermediate goods import prices was slowing while month-on-month figures had turned negative, and that consumer price pressures were expected to ease somewhat as a result. He added that the extent of the relief would depend on the lag between changes in raw material and intermediate goods prices and their pass-through to consumer goods prices.

The export price index held flat from the previous month, as gains in computers, electronics and optical instruments — supported by a stronger won-dollar exchange rate — were offset by declines in coal and petroleum products. Compared with a year earlier, the index rose 48.9 percent, the highest year-on-year increase since March 1998, when it rose 57.1 percent — a gap of 28 years and three months.

The monthly average won-dollar exchange rate rose 2.5 percent, from 1,490.1 won in May to 1,527.3 won in June.

By product category, agricultural, forestry and fishery exports rose 4.2 percent, led by a 10.6 percent gain in fruit. Among manufactured goods, coal and petroleum products fell 13.9 percent — including diesel, down 15.6 percent, and jet fuel, down 18.2 percent — while computers, electronics and optical instruments rose 4.5 percent, driven by DRAM, up 3.1 percent, and flash memory chips, up 11.7 percent, keeping the overall index flat from the previous month.

The export volume index rose 29.8 percent year-on-year last month, driven by increases in computers, electronics and optical instruments, and primary metal products — the highest reading since January 2010, when it rose 42 percent, a gap of 16 years and five months. The export value index rose 74.8 percent over the same period.

The import volume index rose 12 percent year-on-year, driven by increases in computers, electronics and optical instruments, and machinery and equipment. The import value index rose 30.5 percent.

The net barter terms of trade index — which measures the volume of imports that can be purchased with a single unit of exports — rose 15.6 percent year-on-year, as export prices climbed 34.7 percent and import prices rose 16.5 percent compared with the same month a year earlier. The income terms of trade index, which measures the volume of imports purchasable with total export revenues, rose 50 percent year-on-year, as both the net barter terms of trade index, up 15.6 percent, and the export volume index, up 29.8 percent, advanced together.