South Korea's terms of trade improved from a year earlier in February as import prices dropped at a faster clip than export prices, central bank data showed Wednesday.

The terms of trade index for products came to 103.54 last month, up 3.4 percent from the same month last year, according to preliminary data from the Bank of Korea (BOK).

The February reading also marks a 2.4 percent increase from a revised 101.12 in the previous month.

The index measures the amount of imports a country can buy for each unit of exports, showing how the country's exports are doing in comparison with its imports. A reading above 100 means the country can purchase more for each unit its ships abroad.

The improvement in February, however, was largely attributed to import prices falling at a faster rate than export prices.

In February, the prices of South Korea's imports plunged 14.9 percent from the same month last year, while those of exports dropped 12.2 percent on-year, according to the BOK.

The income terms of trade, which measures the amount of imports that can be purchased with the total value of exports, rose 8.1 percent on-year in February, again as imports shrank at a clip faster than exports that month.

South Korea's overall exports, in terms of value, slipped 12.2 percent on-year to $36.4 billion while imports plunged 14.6 percent to $29 billion last month. (Yonhap)