[EDITORIALS]Inflationary typhoonChuseok is approaching but prices keep on soaring uncontrollably, partly because of the damage caused by Typhoon Rusa. Consumer prices, which had been generally stable throughout this year, suddenly climbed 0.7 percent in August, the greatest monthly increase in 17 months.
Prices will probably continue to go up even after September. Although there are seasonal factors, such as unstable agricultural prices due to flood damage, the more important reasons are the perennial structural problems of our economy.
Such longstanding structural problems are evident in the Bank of Korea analysis that rapidly raising housing rental prices triggered the the latest surge in inflation. During July and August, the analysis shows, rapidly increasing housing prices were responsible for one-third of the consumer price increases. Because of the low interest rates, money flowed in to the real estate market, driving up prices.
Conditions in overseas markets make it unlikely that our economy will thrive any time soon. Oil prices have reached $30 per barrel; raw materials prices, especially grains and nonferrous metals, are rising steadily and rapidly.
Then the typhoon hit the peninsula. In addition to ruined farms, the nation's transportation network, especially highways and railroads, was severely damaged, fueling concerns over a possible logistics crisis. If transport is paralyzed during the high-demand season before the Chuseok holidays, prices will highly likely soar again.
Taking that likely inflation into account, the government must pay special attention to the supplies of agricultural goods and get the trains and trucks moving again. In order to stabilize supplies, the government should release its reserves of crops that were particularly hard-hit and increase imports.
Residents of regions safe from the typhoon should refrain from excessive purchases of agricultural products and other necessities. If price instability continues even after Chuseok, the government must draw up a comprehensive policy, including special measures for interest rates and government spending, to restore stability to the market.
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