Choo Kyung-ho: "Inflation Unstable Until September-October, Will Not Reach 7% Range Without Unexpected Events"

[Asia Economy Bali (Indonesia) = Reporter Kim Hyewon] Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho predicted on the 16th (local time) that the domestic consumer price inflation trend will peak around September to October.

On the 16th (local time), after the closing of the G20 Finance Ministers and Central Bank Governors Meeting at the Dusunua Hotel in Bali, Indonesia, Deputy Prime Minister Choo held a press briefing with accompanying reporters and stated, "The consumer price inflation rate in the 6% range is expected to continue until September to October."

Deputy Prime Minister Choo said, "(Domestic) inflation has been in the 6% range since June, and the unstable pattern is expected to continue through September and October," adding, "There may be some changes to the year-end inflation forecast (annual 4.7%)." However, he said, "From our perspective, there will not be a phenomenon where inflation remains fixed at 7% or 8%, far exceeding 6%, for a considerable period," and added, "Unlike the US or Europe, where high inflation has become a structural issue, we do not expect the situation to reach a level that causes serious concern."

The Statistics Korea recently announced that the consumer price index in Korea rose by 6% year-on-year in June. This was the highest figure in about 24 years since the foreign exchange crisis. Deputy Prime Minister Choo said, "There are talks that inflation could reach 7%, 8%, or even 9%, but unless there are additional unexpected events, it will not go that high and will remain in the 6% range," adding, "In the short term, for example, if vegetable supply is disrupted due to unusual weather conditions, temporary inflation in the 7% range may appear."

The outlook for economic growth is becoming more pessimistic. Deputy Prime Minister Choo said, "In a meeting with the International Monetary Fund (IMF) Managing Director, I heard that the global economic outlook has darkened further, and judging from the on-site atmosphere, the IMF growth forecast to be announced in July is expected to be further downgraded compared to April," adding, "Since the global economic slowdown can directly affect our country, which has a high dependence on external factors, it is necessary to strengthen our capacity to respond to the complex crisis."

Regarding Korea's annual economic growth rate and inflation forecast, he said, "Since various indicators have worsened somewhat since the last forecast, some adjustments seem possible," adding, "It is not appropriate to specify how this will appear in the IMF forecast at this time, and we have not confirmed it yet."