Korea Ranks 6th in OECD Inflation League
By Yoon Ja-young
Staff Reporter
Korea recorded the sixth highest consumer price rise among member countries of the Organization for Economic Cooperation and Development (OECD) last year. Though crude oil and crop prices stabilized in the latter half of last year, the staggering local currency offset the positive move.
OECD data showed that the country's consumer prices marked a 4.7 percent hike last year, the highest since 1998 when the country was hit by the Asian financial crisis, and the sixth highest inflation rate among 30 OECD member countries.
Iceland, which sought a bailout program from the International Monetary Fund (IMF), saw the highest inflation, with consumer prices rising 12.7 percent. Turkey followed with 10.4 percent, and the Czech Republic, Hungary and Mexico also recorded an over 5-percent consumer price rise.
The government attributed it to high dependency on imports of oil and crops. However, the country is still seeing higher consumer prices rise compared with other OECD member countries, despite oil and crop prices stabilizing in the latter half of 2008. The country saw a 4.1-percent consumer price rise in December, which is much higher than an average 1.5-percent gain among the OECD member countries.
The weakening of the Korean won worked here, sustaining high import prices, despite stabilizing global prices. The price of gasoline, for example, has risen nearly 15 percent so far this year, though the price of Dubai crude has stabilized since January.
Though deflation is the main concern for the economy this year, some economists are warning that hyper-inflation could grab the world economy in a year or two as countries around the world start massive economic stimulus packages, cutting interest rates, expanding government spending and printing money. These could hit as a boomerang, bringing in inflation whenever the economy turns around.