A gas station in Seoul. [Photo=Yonhap News]

In February 2026, producer prices showed an upward trend again, indicating a renewed inflation pressure. Particularly, the surge in prices of livestock products and financial/insurance services suggests a higher likelihood of cost increases at the production stage being passed on to consumer prices.

According to the producer price index released by the Bank of Korea, producer prices in February 2026 rose by 2.4% compared to the same month last year, an increase from the previous month's 1.9%. This signifies that producer prices, which had been on a gradual upward trend since the end of last year, have entered another phase of increase.

The core driver of this rise is agricultural, forestry, and fishery products, especially livestock.

Livestock prices surged by 15.5% year-on-year, acting as a major factor pushing up overall prices. This is analyzed not as a simple supply-demand imbalance, but as a structural outcome stemming from the combined impact of increased feed costs and a decrease in the number of livestock.

Amidst the growing burden of feed costs due to rising international grain prices and exchange rates, farms that experienced losses during the previous price decline have reduced their scale of operations, leading to a decrease in overall supply. Furthermore, the persistent risk of diseases such as African Swine Fever (ASF) and Avian Influenza (AI) appears to have exacerbated the upward price pressure.

Manufactured goods generally continued their gradual upward trend.

Primary metal products increased by 8.3% year-on-year, and computers, electronic and optical equipment also rose by 10.0%, reflecting the cost pressures across the manufacturing sector. This is a typical pattern influenced by global raw material prices and industrial cycles, with the potential for price increases at the production stage to gradually spread to downstream industries.

In the service sector, financial and insurance services stood out the most.

This sector surged by 20.0% year-on-year, driving overall service prices. This is interpreted as a direct reflection of increased financial costs and expanded risk premiums due to rising interest rates.

Transportation, accommodation, and food services also continued their upward trend, influenced by rising labor costs and raw material prices. Notably, the increase in livestock prices is acting as a stimulus for dining-out costs, spreading throughout service prices.

Conversely, electricity, gas, water, and waste management services decreased by 1.1% year-on-year, partially offsetting the overall price increase.

However, this is a result of policy-driven rate controls rather than market prices, and if these suppressed prices are reflected all at once in the future, they could become an additional factor for price increases.

In summary, the current rise in producer prices exhibits characteristics of 'multi-layered inflation,' where different causes are simultaneously at play across various sectors, rather than being a problem of specific items.

In the agricultural and livestock sector, cost increases have combined with supply reductions; in manufacturing, raw material prices and global economic trends have had an impact; and in the service sector, rising interest rates and labor costs are driving up prices.

This structure suggests that price stabilization in the short term will be challenging.

In particular, the rise in producer prices tends to be passed on to consumer prices with a time lag, leading to analyses that it is highly likely to translate into increased perceived inflation pressure going forward.

Trends in producer price index fluctuations. [Data=Bank of Korea]