According to the Bank of Korea, import prices in South Korea have declined for the fifth consecutive month. Despite an increase in international oil prices, with crude oil approaching $70 per barrel, the drop in the won-dollar exchange rate to the 1,360-won range has led to a decrease in import prices. This exchange rate stability also caused export prices to fall by more than 1% compared to the previous month, marking a decline for the third consecutive month.
On the 16th, the Bank of Korea released the “June 2025 Export and Import Price Index and Trade Index,” indicating that last month’s import price index fell by 0.6% compared to the previous month, continuing the five-month streak of decline. Compared to the same month last year, it dropped by 6.2%.
Raw materials, particularly crude oil and other mining products, saw a 1.5% increase compared to the previous month. However, intermediary goods such as chemical products, computers, electronics, and optical devices dropped by 1.6% compared to the previous month. Capital goods and consumer goods fell by 1.1% and 1.0%, respectively.
The increase in international oil prices did not impact import prices significantly due to the decline in exchange rates. The price of Dubai crude rose 8.7% from $63.73 per barrel in May to $69.26 per barrel in June. However, this figure represents a 16.1% decrease compared to the same month last year.
Conversely, the won-dollar exchange rate was 1,366.95 won in June, a 2.0% decrease from May’s 1,394.49 won, prompting last month’s export prices to drop by 1.1% from the previous month and by 4.5% compared to the same month last year.
The net terms-of-trade index for goods improved by 4.0% compared to the same month last year, with import prices (-7.4%) falling more than export prices (-3.7%). This index has been on an upward trend for 24 consecutive months. An improvement in the net terms-of-trade index means that South Korea can import more goods for the same amount of exported units than before.
Additionally, the income terms-of-trade index rose by 11.0% during the same period, supported by the rise in both the net terms-of-trade index (4.0%) and the export volume index (6.8%). The income terms-of-trade index measures the ability to increase imports with export revenue, and its rise signifies improved capacity to import quantities with total export revenue.