International Oil Price Drop Leads to 3-month Consecutive Decline in Import Prices

In a significant shift, the international oil price has seen a dramatic fall, decreasing by over 6% in just one month. This downturn has directly impacted import prices, marking a third consecutive month of decline.

Key Statistics: According to the Bank of Korea's latest export-import price index statistics, the import price index for April 2023 stood at 140.32, a 1.9% decrease from March. This follows a four-month upward trend that ended last October, with prices now falling for three consecutive months since February.

Sector-wise Impact: The decline was most pronounced in raw materials and intermediate goods, which fell by 4.3% and 1.3% respectively, while capital goods saw a slight increase of 0.3%.

Underlying Causes: The Bank of Korea attributes this downturn to the falling international oil prices. Specifically, the monthly average price per barrel of Dubai crude oil dropped by 6.6%, from $72.49 to $67.74.

Notable Declines: Among the items, mining products, coal and petroleum products, and primary metal products saw significant drops. Crude oil, bunker C oil, refined aluminum, and secondary batteries were particularly affected.

Export Prices: The export price index also experienced a downturn, decreasing by 1.2% from February to April. Despite a slight decrease in the average won-dollar exchange rate, the decline in export prices was led by coal and petroleum products, chemical products, and transportation equipment.

Positive Trends: On a brighter note, the export volume and value indices showed growth, and the net commodity terms of trade index continued its upward trend for the 22nd consecutive month, thanks to import prices falling more significantly than export prices.