South Korea's producer price index (PPI) rose 1.5% on year in February, cooling from the 1.8% on-year rate logged in January, reported the Bank of Korea on Friday.

The PPI in February was flat from January, and in recent months has been posting under 2% on-year gains.

South Korea's PPI measures the prices of goods and services sold by domestic manufacturers at the wholesale level to large buyers, or in business-to-business transactions. The PPI is distinct from the consumer price index (CPI), that captures prices paid at retail by ordinary consumers.

The PPI is considered one indicator of the possible future path of consumer prices, as retailers try to recoup costs or pass on savings to shoppers.

Tempering the PPI in February was a modest 1.3% on-year gain in the price of manufactured products, and moderate 1.6% on-year rise in the cost of business services.

In contrast, utility bills for producers rose 5.1% on year.

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

The Bank of Korea in late February lowered its key policy interest rate to 2.75% from 3%, citing moderate economic growth and tempered inflation.

The central bank forecast the nation's inflation rate, as measured by the CPI, to remain stable at 1.9% in 2025.