Oil Price-Apartment-Agricultural Products, Three Unfavorable Prices Threat

Out of economic indices of the second half of the year, the most stabilized price index has taken the serious turn.

Planed to control a growth rate of consumer price within 3% for the year, the government will hardly attain its goal and will be frustrated in a general economic policy operation.

According to the Ministry of Finance & Economy (MOFE), Bank of Korea (BOK) and private economic research institutes on August 25, as the recent international oil price, farm prices and the real estate price have largely increased, they have threatened the price of the second half of the year.

International oil price has increased as the Iraq attach rumor of USA hasn’t diminished

and the crude oil stocks of USA decreased to the lowest level after 19 months.

In November, the delivery future price of DUBAI Oil of the Middle East production that occupies the approx. 70% of crude oil which came into Korea, jumped to 26 dollars increased by 18% from 22 dollars per barrel at the beginning of the year.

Owing to flood damages of the Southern part of Korea, the farm prices such as vegetable and radish are skyrocketing with Chusok just before on.

In Garak market, the cabbage price (basis of 5t truck) was 1,780,000 won at the end of

the last month, but 3,400,000 won on August 23. Also, the radish price jumped to

2,900,000 won from 1,200,000 won.

KACM forecasts that the expense for 5 members family worship service will increase to approx. 123,400 won (on the basis of Hanaro Club) by approx. 11% over the last year. There will be ‘‘Unrest of Chusok price’.

Despite the government’s speculation control policy in real estate, the apartment price has increased all over the country.

After the government took the measures, the apartment prices in Gangnam0gu and Seocho-gu Seoul cooled off, but the prices in surrounding areas such as Songpa-gu and Gwangjin-gu are shaking. The real estate industry foretells that the price of apartments will increase continuously until Chusok.

There are the unfavorable price factors such as the construction wage based on manpower problem and the wage increase of the service field with the president election in December just before on.

Gim Beom-Sik, the senior researcher of Samsung Economic Research Institute said, “Beside of the international oil price and farm prices, the personnel expenses are likely to increase and the price increase pressure of the second half of the year will be considerably higher than the first half of the year.”