Consumer Prices On the Rise Over the Past Three Months

While the economic slump is continuing, there has been growing signs of price instability as the February consumer prices, including agriculture and fisheries products and international oil, have been on the rise for the last three months compared to the same period last year.

As a response, there is concern of an actualization of stagflation where prices continue to rise amidst an economic slump.

Statistics from March 2, 2004 show that consumer prices increased 0.4 percent compared to January, and 3.3 percent compared to February last year. Compared to the same period last year, it marked an increase of 0.4 percent from December of last year, and 0.6 percent from January this year in the past three months.

In particular, cost-of-living expenses consisting of 156 items such as food prices that consumers frequently purchase in their daily lives showed even higher “sensory price” increases as the numbers indicated a 0.7 percent increase compared to January and a 4.2 percent increase compared to February last year.

Fresh produce, including fish, vegetables, and fruits showed an increase of 2.3 percent from January, and a whopping 9.4 increase from February last year. Due to a sudden rise in international oil prices, petroleum prices have instigated the price increase by rising 1.6 percent in a month. Gasoline prices, which have a significant effect on the overall price, showed an increase during four consecutive months.

The Korean Statistical Information System forecasts the possibility of a continuation in price instability as it reported that “among international raw materials, wheat, beans, and petroleum reflect immediate prices, but scrap metal and nonferrous metals can have an effect on domestic prices over a long period.”

An official at the Bank of Korea said that “it is likely that prices this year will increase more than three percent as a result of an increase in raw material prices” and added that “it seems that the Future Price Measure, which reports to the Monetary Policy Meeting on the first of next month should be upwardly adjusted. The original measure of the Bank of Korea was 2.9 percent.

Jong sik Kong Ki-Jeong Ko kong@donga.com koh@donga.com