Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
Inflation expected to continue upward trend
By Lee Min-hyung
Consumer price growth hits over-13-year high in April
By Lee Min-hyung
Consumer prices soared by almost 5 percent in April, the highest since the 2008 global financial crisis, and are feared to continue rising at an alarming pace for the time being amid global inflation shocks, experts said Tuesday.
Statistics Korea said Tuesday the consumer price index rose last month by 4.8 percent from a year earlier. The pace of inflation has risen sharply from the previous month when the figure stood at 4.1 percent.
The inflationary pressure was sparked by price hikes of petroleum products and public utilities such as electricity and gas, according to the statistics agency.
The agency also warned that the economy will likely face a growing inflationary burden for the next few months.
“There stands a high probability that consumer prices will keep rising considerably, and we do not see any signs that will help slow down the pace of inflation,” said Eo Yoon-sun, an official at the economic statistics division of Statistics Korea.
The Bank of Korea (BOK) also expected the economy to continue facing the high inflationary pressure for the time being, citing rising prices in raw materials and demand recovery after a recent lifting of social distancing rules.
“Consumer prices will rise at the 4 percent range for the time being amid prolonged inflationary pressure,” BOK Deputy Governor Lee Hwan-seok said. The central bank also pledged to thoroughly monitor multiple factors ― such as Russia's invasion of Ukraine and raw material price movements ― which will affect prices here.
Economists say that raising the interest rate is the only solution despite concerns that steep rate hikes will take a toll on economic growth.
“Raising the interest rate is de facto the only way to help tame inflation to some extent,” said Kang Hyun-ju, an economist at the Korea Capital Market Institute. “It is hard for us to predict how much consumer prices will keep rising, but chances are the pace of inflation will slow down sometime around the end of 2022 under the scenario that the geopolitical risk is mitigated.”
Reflecting on a statistical base effect, consumer prices will not keep rising at such an alarming pace by the end of this year, he said.
Korea University professor Kim Jin-ill said the country cannot escape the global inflationary pressure.
“The global economy is facing an inflationary shock, so increasing the key rate is the only possible measure to deal with the challenge,” he said. “It is hard for me to predict how long the inflationary pressure will persist, as it remains to be seen when lingering external uncertainties ― such as the global supply shock and the outbreak of war in Eastern Europe ― will subside.”