Inflation Rises 5.8 Pct. Over Last 18 Months

The prices of 52 essential goods designated by President Lee Myung-bak rose 5.8 percent on average over the past 18th months, a study said yesterday. The consumer price index rose 4.9 percent in the period.

These were findings from an analysis of inflation (based on data from the National Statistical Office), foreign exchange rates and crude oil prices from March last year, before the onset of the global financial crisis, to September this year.

The study was conducted jointly by The Dong-A Ilbo and the Yeouido Institute under the ruling Grand National Party.

Of the 52 items, 38, or 73 percent, saw their prices increase. Of the 52, 30 including sugar but excluding public fees managed by the government saw prices rise an average of 8.5 percent.

The price rises for Chinese cabbage (37.8 percent), pork (36.2 percent), milk (36.2 percent), sugar (29.9 percent) and cooking oil (24.5 percent) were higher than the average hike in the won-dollar exchange rate (18.3 percent) over the period.

The price of certain agro produce including Chinese cabbage gained due to a seasonal hike in demand, but the price of foodstuffs rose a larger portion in tune with the hike in the exchange rate.

Prices were frozen for five items, including public utilities, subway and intra-city bus fares, private tutoring materials, and mobile phone rates, whose prices are controlled by the government. Nine items saw their prices decline, including green onions (minus 36.1 percent), garlic (minus 2.4 percent), radish (minus 5.9 percent), flour (minus 19.7 percent), and liquefied propane gas (minus 13.9 percent).

Separately, the Yeouido Institute conducted a public survey of 3,552 adults nationwide on consumer prices last month, with 57.8 percent saying inflation rose significantly.

In addition, 34.5 percent said prices rose, suggesting that 92.3 percent feel burdened over high inflation. More than 90 percent said life got tougher due to price hikes.

Notably, 86.6 percent said they agree that the reason for inflation is that when the exchange rate and raw material prices rise, suppliers increase the prices of goods immediately, but when the value of the won and raw material prices fall, the suppliers do not lower their prices.

Even when companies immediately reflect changes in the exchange rates and raw material prices in product prices, most say companies pocket extra profits in the course of fluctuations in the exchange rate and raw materials costs.

sunshade@donga.com