South Korean producer prices fell from a year earlier for the first time in 32 months as fresh food and information-technology costs declined, underscoring the Bank of Korea’s room to cut interest rates next month.
Prices dropped 0.1 percent in July from a year ago after a 0.8 percent increase in June, the central bank said in a statement today. They fell 0.5 percent from the previous month.
South Korea’s consumer inflation moderated to a 12-year low in July, while exports fell the most since 2009. The BOK, which left borrowing costs unchanged yesterday after a surprise cut in July, may be waiting for another round of global easing before it acts again, said Daewoo Securities Co.’s Yoon Yeo Sam.
“The BOK will likely cut interest rates in September” if the U.S. Federal Reserve and European Central Bank act to shield against a global downturn, Yoon said.