South Korea Import Prices Fall for Third Month as Won Strengthens

South Korea’s import prices fell for a third straight month in August as a stronger won more than offset a sharp rise in oil costs. The import price index declined 2.4% from July, following a 1.0% drop in July and a 4.2% fall in June, according to preliminary Bank of Korea data released Tuesday.

August’s currency move was unusually large. The won strengthened 6.1% on a monthly-average basis against the U.S. dollar, while Dubai crude, South Korea’s benchmark, jumped 15.6% from July. Import prices measured in contract currencies actually rose 3.2% during August, showing that the decline in won terms reflected the exchange-rate cushion rather than a broad fall in overseas prices.

Bank of Korea’s official statistical calendar scheduled the August export/import price and trade-index release for Sept. 15. The same calendar lists the September figures for Oct. 16, making the next report an important test of whether the currency-led easing in won-based import costs can persist.

Stronger won offsets a renewed oil-price increase

On a monthly-average basis, the dollar-won exchange rate fell to 1,406.30 won in August from 1,497.43 won in July. Because many imported goods are priced in foreign currencies, the stronger won reduced their converted cost in local-currency terms even as some underlying commodity prices moved higher.

Oil was the clearest counterforce. Dubai crude averaged $88.75 a barrel in August, up from $76.75 in July. That helped push raw-material import prices up 1.5% from the previous month, with mining products rising 2.1%. The increase in raw materials means the headline decline was not a simple story of cheaper inputs across the board.

Further along the supply chain, the picture was different. Import prices for intermediate goods fell 4.0%, while capital goods declined 4.2% and consumer goods dropped 4.4%. Chemical-product prices were down 6.1% and primary-metal products fell 4.2%, helping pull the broader intermediate-goods measure lower despite the oil-price increase.

Several individual products also recorded sizeable monthly declines. Coffee import prices fell 9.3%, lithium hydroxide dropped 9.1%, and prices for system semiconductors and mobile phones each declined 6.1%. Those movements were not uniform across the import basket, but they show how the currency effect reached beyond energy-sensitive categories.

Three consecutive monthly declines have brought some near-term relief after import costs had risen sharply earlier in the year. It has not erased the year-over-year increase: won-based import prices were still 15.6% higher than in August 2025. For businesses that depend heavily on imported materials, the month-on-month easing therefore sits alongside a cost base that remains elevated compared with a year ago.

Export prices retreat in won terms too

A stronger currency also reduced the won value of exports priced in foreign currencies. South Korea’s export price index fell 3.7% in August from July, the steepest monthly decline since December 2022. Export prices measured in contract currencies rose 2.2%, another sign that the exchange rate was central to the drop in the won-based measure.

Even after the monthly fall, won-based export prices were 42.4% above their level a year earlier, extending the year-over-year advance to a 12th consecutive month. Prices for manufactured exports fell 3.7% from July, with chemical products down 5.3%, while some petroleum-related products moved higher with crude oil.

Semiconductor pricing remained a major reason annual export-price growth was so strong. DRAM export prices were up 253.4% from a year earlier and flash-memory prices rose 250.6%, even though DRAM prices slipped 3.4% from July. The contrast between a monthly currency-driven decline and very large annual gains is important for interpreting the export-price index: August was weaker than July in won terms, but export pricing remained far above year-earlier levels.

That distinction also matters for corporate revenue and trade comparisons. A stronger won can lower the local-currency value of foreign-currency export prices without implying that overseas buyers are paying less in their own currencies. August’s 2.2% rise in contract-currency export prices points in the opposite direction from the 3.7% decline measured in won.

Trade purchasing power improves as chip prices stay high

Broader trade indexes showed strong year-over-year growth in both volumes and values. Export volume rose 25.9% from August 2025, marking a tenth consecutive annual increase, while the export value index climbed 75.8%. Import volume increased 12.0% and import value rose 23.1% over the same period.

Those movements fed into a sharp improvement in South Korea’s terms of trade. The net barter terms of trade index rose 27.1% from a year earlier, the largest increase since the series began in 1988. The income terms of trade index, which also incorporates export volume, increased 60.0%, likewise the strongest annual gain on record.

Price movements on the two sides of trade explain much of that improvement. Lag-adjusted export prices rose 39.6% from a year earlier, while corresponding import prices increased 9.9%. Semiconductor prices were a major contributor on the export side, allowing the purchasing power of exports to improve even as higher oil prices added pressure to the import bill.

August therefore produced two related but distinct signals. Won-based import prices fell on the month because the currency strengthened enough to offset a large oil-price increase, while South Korea’s trade purchasing power improved sharply from a year earlier because export prices, especially in semiconductors, rose much faster than import prices. The Bank of Korea’s next export/import price and trade-index release is scheduled for Oct. 16 and will show whether that mix continued into September.