[Weekly Outlook] Focus on Chuseok Livelihood Stability Measures Amid High Inflation

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Kim Hyewon] Next week (August 8?12), attention will focus on the government’s Chuseok livelihood stabilization measures amid high inflation. With the domestic consumer price inflation rate recording over 6% for two consecutive months and Chuseok arriving earlier than usual, there is keen interest in what measures the government has prepared to ease the public’s inflation burden.

According to related ministries on the 7th, the Chuseok livelihood measures to be announced soon are expected to focus on stabilizing living costs. The measures will likely include efforts to stabilize food prices and reduce essential living expenses. In particular, there will be an emphasis on managing prices of holiday season goods. This is due to the sharp rise in prices of vegetables in July, pushing the inflation rate of agricultural, livestock, and fishery products to 7.1%, the highest in seven months, signaling a worrying upward trend in food prices. The option of further expanding tariff quotas appears likely.

On the 1st, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho stated during a briefing to the National Assembly’s Planning and Finance Committee, “We will prioritize stabilizing the livelihood economy,” adding, “We are preparing livelihood measures in anticipation of an earlier-than-usual Chuseok.”

On the 10th, Statistics Korea will release the employment trends for July. It will be important to check whether the increase in employed persons has slowed. The government expects the employment market to gradually slow down starting in the second half of this year. This is attributed to the strong employment market in the second half of last year and the conclusion of direct job creation projects.

The number of employed persons in June was 28.478 million, an increase of 841,000 compared to a year earlier. This is the largest increase for the same month in 22 years since 2000 (877,000), but it has slowed compared to January and February this year, when increases exceeded one million.

The Bank of Korea will announce the ‘Financial Market Trends for July’ on the 10th. As of the end of June, household loans in the banking sector totaled 1,060.8 trillion won, marking the third consecutive month of increase since April. While high-interest credit loans have decreased, housing-related loans are on the rise. Household loans from the five major banks have decreased for seven consecutive months from January to July this year.

On the 12th, the ‘July Export and Import Price Index’ will be released. In June, due to strong raw material prices, the import price index (167.54) was 20.5% higher than a year earlier. It has risen for 19 consecutive months, but the rate of increase slowed compared to May (32.0%). It will be necessary to see whether the pace of export price increases slowed in July.