South Korea will closely monitor products whose prices could be influenced by currency exchange rates as part of its efforts to bring the nation’s runaway inflation under control, the top economic policymaker said Friday.
The remarks by Finance Minister Bahk Jae-wan came amid worries that the won’s recent steep descent could drive up prices of key raw materials and other imported goods.
“The prices of manufactured goods and farm imports see increasing volatility as they depend much on imported commodities, still posing challenges in dealing with inflation,” Bahk said in a weekly price stabilization meeting.
“By strengthening cooperation with relevant ministries and the private sector, we will push to reduce the impact of exchange rate fluctuations on inflation and employ all possible policy means to help ease the cost production burden on businesses.”
South Korea has been fighting rising inflation, which has been staying stubbornly high due to rising food and commodity prices.
The government has unveiled diverse measures to rein in prices instability by pushing such actions as reducing import tariffs and unloading government stockpiles of farm goods.
The efforts, however, seem to be getting nowhere in easing price upswings. The nation‘s consumer prices jumped 5.3 percent last month from a year earlier, the fastest increase in three years. It is also much higher than the government’s annual inflation target of 4 percent.
Against this backdrop, a weak local currency would not be welcome news for policymakers as it makes prices of imported products more expensive and puts upward pressure on inflation.
According to the central bank, the won has fallen more than 12 percent against the U.S. dollar over the past two months, making it the worst performer among the major 21 currencies.
Bahk still predicted that inflation will likely slow in September compared with August, citing the steep price falls of foods and farm products, but he noted that the government should not lower its guard as bad weather and a possible supply shortage of farm goods could trigger instability in prices.
“In response to uncertainties related to inflation situations at home and abroad, we will intensify our policy efforts to stem the spread of inflation expectations and stabilize prices for ordinary people’s livelihoods,” Bahk said.
On the industrial output figures unveiled earlier in the day, the minister noted that the overall economic recovery trend remains on track, though production growth seems to be “faltering” in recent months.
South Korea’s industrial output fell 1.9 percent last month from July, marking the second straight monthly contraction, following the previous month’s 0.3 percent decline.
“The output growth is faltering, but it seems to be affected partly by temporary and seasonal factors such as repairs of vehicle facilities and movement of some auto plants last month,” Bahk said.
“We need to wait and see further to figure our future direction.” (Yonhap News)
