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/ Yonhap

South Korea's import prices fell for a second straight month in July, as both the won-dollar exchange rate and global oil prices declined together. Export prices, meanwhile, turned upward after one month of decline, driven largely by rising semiconductor prices, and the terms of trade — a gauge of Korea's external purchasing power — improved sharply.

According to preliminary "July 2026 Export and Import Price Indexes and Trade Indexes" released by the Bank of Korea on the 14th, the won-based import price index stood at 160.09 last month, down 1.0% from the previous month. This follows a 4.2% drop in June, marking two consecutive months of decline. Year-on-year, import prices were up 18.7%.

Falling global oil prices and the exchange rate contributed to the decline in import prices. The average monthly Dubai crude price in July was $76.75 per barrel, down 3.4% from $79.45 in June. Over the same period, the average won-dollar exchange rate fell 2.0%, from 1,527.30 won to 1,497.43 won.

By use, intermediate goods prices fell 2.2%, led by coal and petroleum products (-3.9%) and primary metal products (-3.8%). Capital goods and consumer goods prices also declined, by 1.8% and 0.1%, respectively. Raw material prices, however, rose 0.8%, as higher natural gas prices offset the drop in crude oil prices. Among specific items, crude oil fell 4.8%, propane gas fell 25.2%, and system semiconductors fell 9.9%.

Excluding the effect of the exchange rate, import prices measured in contract currency rose 0.9% from the previous month. The Bank of Korea noted that while the exchange rate has continued falling this month, global oil prices have been rising amid escalating tensions in the Middle East, suggesting mixed upward and downward pressures on import prices going forward.

Export prices rebounded after one month of decline. The won-based export price index came to 190.65 in July, up 1.0% from the previous month. Year-on-year, it rose 49.1%, the steepest increase since March 1998 — a span of 28 years and 4 months.

This reflects continued strength in semiconductor prices even amid the falling exchange rate. Among manufactured goods, computers, electronics, and optical equipment, as well as coal and petroleum products, each rose 4.8%. By specific item, computer storage devices rose 17.6% and DRAM rose 6.6%, while diesel and naphtha rose 11.2% and 6.2%, respectively.

Export volumes also continued their upward trend. The July export volume index rose 20.0% year-on-year, marking nine consecutive months of growth, driven by increases in computers, electronics, and optical equipment — including semiconductors — as well as transport equipment. The export value index jumped 64.2%. Over the same period, the import volume index and import value index rose 14.7% and 25.8%, respectively.

The terms of trade improved sharply, driven by rising semiconductor prices. The July net barter terms of trade index rose 24.7% year-on-year, its highest growth rate on record, as the time-lag-adjusted export price rose 36.8%, far outpacing the 9.7% rise in import prices. The index level itself was also the highest since September 2007, a span of 18 years and 10 months.

The income terms of trade index likewise rose 49.7% year-on-year, as both the net barter terms of trade and export volumes improved together. Lee Heung-hoo, head of the Bank of Korea's Price Statistics Team, said the continued improvement in the terms of trade reflects the simultaneous rise in export prices and export volumes, adding that this can be seen as evidence that Korean companies' export competitiveness has strengthened and the economy's external purchasing power has improved.

                                                                                                            Park Seo-ah