Despite a prolonged decline in exports, South Korea's terms of trade continued to improve in September as import prices shrank at a faster rate than export prices, central bank data showed Thursday.

The country's terms-of-trade index for products soared to 101.63 in September, up 12.5 percent from the same month last year, according to the preliminary data from the Bank of Korea (BOK).

The index gauges the amount of imports a country can purchase for each unit of its exports, which shows how the country's exports are doing in comparison with those of others. A reading above 100 means the country can purchase more for each unit it ships abroad.

The September reading marks a 1.7 percent increase from a revised 99.98 in the previous month. It also marks the 13th consecutive month of on-year gain.

The rise, however, was largely attributed to a large cut in import prices, which plunged 23.9 percent on-year last month, while export prices slipped 14.3 percent.

The falls in both import and export prices have been attributed to weaker global oil prices.

The trade ministry earlier said the average price of Dubai crude more than halved to US$45.8 per barrel last month from $96.6 per barrel in September 2014.

Raw materials, including oil, account for nearly 40 percent of South Korea's overall imports, while petroleum and petrochemical products, by-products of processing imported oil here, account for over 25 percent of total exports.

With large cuts in prices of petroleum and petrochemical products, South Korea's exports have fallen every single month since the start of the year.

As import prices dropped at a faster clip than export prices, the country's income terms-of-trade index also continued to improve significantly in September.

The index, which shows the total amount of imports that can be purchased or exchanged with the total value of exports, jumped 20.9 percent on-year to 141.78 last month, according to the BOK. (Yonhap)