South Korea's producer price index (PPI) rose 1.7% on year in January, although the index did rise a non-seasonally adjusted 0.6% from December, reported the Bank of Korea on Thursday.

South Korea's PPI measures prices charged by domestic producers for goods and services at the wholesale level, that is in transactions between enterprises.

The PPI is distinct from the consumer price index (CPI), that measures price paid by shoppers in retail locations.

However, as retailers often try to recoup costs or pass along saving incurred in operations, the PPI is sometimes considered a leading indicator of pending rates of consumer price inflation.

In PPI sub-indices in January, manufactured product prices rose 1.6% on year in January, reported the Bank of Korea.

Agriculture, forestry and marine product prices declined 2.3% on year, while utility charges rose 4.2%.

Helping to push the PPI higher in January were coal and oil prices, up 4.5% on year, said the Bank of Korea.

The PPI for the broad category of services rose 1.7% on year, with modest decreases air and water transport bills.

The Bank of Korea has a 2% inflation target rate on the nation's CPI.

The nation's official inflation rate logged 2.2% in January, up from 1.9% in December, and notching at the highest level of inflation in six months.