Inflation Grows Faster Than GDP

Consumer inflation is expected to outgrow economic growth this year for the first time in five years.

In 2003, consumer prices grew 3.5 percent, surpassing the economic growth rate of 3.1 percent.

Strategy and Finance Minister Kang Man-soo indicated Wednesday that consumer prices have risen by 5 percent this month over a year ago, well above the initial target of 3 percent. The inflation rate is expected to be higher than the economic growth rate this year, meaning Korea will be exposed to stagflation ― higher inflation amid stagnant economic growth.

The government is expected to lower its growth forecast to the 4 percent range this year, down from its ``ambitious'' 6 percent target.

Next month, it will unveil revised targets for growth rate, inflation and the current account balance.