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South Korea October producer prices mark fastest growth in 13 years -Breaking

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© Reuters. FILEPHOTO: A worker works on a production line in Icheon (South Korea), March 6, 2020. REUTERS/Heo Ran

SEOUL (Reuters) – South Korea’s producer prices indicator (PPI) recorded its highest growth rate in the past 13 years in October according to data from central banks on Friday. The figures highlight oil-led inflationary pressures that support further policy tightening.

Last month, the Bank of Korea data revealed that the PPI increased 8.9% over a previous year, which was the fastest pace since Oct 2008, and continues to grow for the 11th consecutive month. The September PPI rose 7.6%.

A breakdown of the data revealed that there was a 15.4% rise in industrial products’ producer prices. The biggest driver was the increase for oil and coal, which jumped 85.6% over the previous year.

Also, the producer price of gas, electricity and water, as well agricultural, livestock, and fishing goods and services, increased 6.2% and 2.6% respectively.

Oil prices plunged to near 6-week lows after a surge in crude oil prices. The drop was caused by China’s announcement that it would be releasing its reserve.

South Korea’s central banking will hold its last rate-setting meeting this year, on November 25, following a statement by its governor last month that “the bank may consider further raising rates at the next gathering”.

Current policy interest rates are at 0.75%

It is expected that the bank will also release revised inflation forecasts next week. In mid-October, it stated that they saw an increase of 2.1%.

Friday’s data showed that the PPI grew 0.8% monthly, an acceleration from September’s 0.4% increase.

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