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Wednesday,November 20,2019
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Skyrocketing prices makes for gloomy Chuseok holidays

With the national holiday Chuseok quickly approaching markets are crowded with people who want to buy holiday treats, not just any treats mind you, the cheap variety. This is completely different from last year. Last year, customers did not flinch when it came to the price of items, but oh, how the times of changed. Today prices have skyrocketed. According to the National Statistical office as of September 1st, consumer prices in August have increased by 5.3% compared to last year at the same time. Therefore the rate of increase is the highest since August 2008 (5.6%) and compared to July, the price increase is 0.9%. 


The core price except for agricultural products and petroleum has increased 4% compared to last August, recording the highest since April 2009(4.2%). The core price has shown a 10-month successive increase. The consumer price index for living necessities including fish, vegetables and fruit has skyrocketed up 13.8% compared with last August and jumped up 9.9% when compared to last month. The reason for the increase is high demand. The money pinch is easily seen on peoples’ faces.


Experts say there are largely two reasons for the speedy rise of prices. First of all, the output of agricultural and marine products has dwindled due to damages of farms from exceptionally localized heavy rain. On September 1st a conference of price-related ministers was held in the Central Government Complex in Gwanghwamun, Park Jae-wan a minister of Ministry of Strategy and Finance said, “I feel so sorry for ordinary people who are burdened by increased prices of fruit and vegetables before Chuseok.” Also, he added “Compared to a normal year, we have faced unexpected rains which was twice of what we would normally expect. Skyrocketing prices of agricultural products was inevitable. Price fluctuations due to oil prices and international food prices and a jump in the price of gold is not a problem only facing Korea but is a global problem.

 

This was an unavoidable situation.” Mr. Park especially emphasized, “In this situation, price stabilization is the best welfare. So I will concentrate on making policies which can stabilize prices.” He said he would inspect the supply performance and prices of fifteen commodities in high demand for Chuseok such as apples and pollack one by one and increase the supply if the demand for items is unbalanced. Also he stated he would look into foreign importers and distributors if the supply would be insufficient for consumers. In particular, he emphasized cabbage and radish should be shipped out for supply of contract cultivation before Chuseok and pepper and egg whose prices have increased lately should expand reserved supplies.


Another reason of price fluctuation is the structural characteristic of Korean prices such as the high distribution costs and monopolized market structure. Yoon Jong-won, a director of economic policy in the Ministry of Strategy and Finance on August 10th participated in a symposium hosted by the Korean Economic Society titled ‘Increasing price, Prospects and Measures for the future’ and presented a report named ‘The characteristic of Korean price structure and policy implication. Mr.Yoon said, “The recent price fluctuation is a result of the pressure of the prices from demand and supply.” And he pointed “The Korean price structure does not provide an environment for market competition and it is too variable which blocks the Korean market from developing.”


The upward trend of prices is not only our problem. China is facing a similar fate. The Consumer Price Index (CPI) of China in June raised about 6.4% compared with last year's numerical values. The state Statistics Bureau announced that it is the highest numerical values since 2008. The Producer Price Index (PPI) increased around 7.1%. This was also because of flooding. Also pork prices rose. The government of China judged that inflation of prices is the arch-enemy who threatens ordinary persons and gives them additional burdens. China has tried to set price stabilization to stabilize the life of the people. They set their sights on removing the risk of inflation prices.


A lot of other countries have problems of inflation prices including China and Korea. The Korean Government plans to expand agricultural imports for solving supply apprehension and to apply a customs-free policy to some products. Also, the Korean government intensively imported Chinese cabbages. To relieve chili prices, Korea released 400 tons of chilies from the chili reserves. Chili is one of the highest advancing priced products.


The government has pronounced to terminate an argument about improving the distribution structure. For this, the government plans to expand their policy of declaring descriptive label and product information. Another item of concern for the government is to eliminate consumer conflicts through promoting excellent business practices. Along with this, the government plans to strengthen the market through reliable after service.

Park Sung-yoon  tjddbs1104@dongguk.edu

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