&#91EDITORIALS&#93Inflation rears its head

Prices are beginning to climb early this year. The consumer price index rose 0.6 percent this month, the largest increase in 18 months. Housewives must have surely felt the steep rise in prices as they shopped for Lunar New Year presents and prepared to set the table for their ancestors, but if the rise continues like this, the government will have a hard time achieving its target inflation rate of 3 percent this year.

Agricultural product prices were pushed up by holiday demand; oil prices are up and service fees, like health insurance premiums and university fees, are also climbing. Although food prices rise and fall, it is hard to make people change their minds and stop thinking that the only way prices go is up.

The stronger won helps to offset rising import prices, but the biggest burden may be the benchmark oil price, Dubai oil, which is hovering around $30 per barrel. Policymakers have already decided to increase public transportation fees. Real estate prices must also be watched; speculation could break out again in many areas.

Consumers, salaried workers and the elderly who are dependent on investment income are the biggest losers; real interest rates on savings are now negative.

The bad economy does not allow policymakers to force up interest rates to combat inflation, but there are some things it can do. Improve the distribution network for goods. Nip real estate speculation in the bud. Manage public services more efficiently to keep price increases down. Policymakers must worry about the overall economy, but they also have to fight rising prices.