&#91EDITORIALS&#93Consumer price worries

A red alert has sounded for the Korean economy, as consumer prices escalate amid an economic slowdown. The recent surge in consumer prices were forecast when international oil prices rose rapidly after the war broke out in Iraq, but they were steeper than initially expected, weighing on an already overburdened economy. Consumer prices went up 1.2 percent in March, the highest monthly rise in 30 months. Yearly consumer prices rose 4.5 percent over last year. If things are left as they are, the government’s goal to rein in consumer prices will not be achieved.
Recent increases in consumer prices are driven not just by surging international oil prices, but also by the uncertainty in the supply of agricultural and fishery products and the increase in service charges such as college tuition fees. Uncertainty in the prices of agricultural and fishery products may be seasonal, but outside factors, such as oil prices, are what concern us. There is, of course, a slim chance that the uncertainty in consumer prices may lead to a stagnation of low growth and high prices while domestic consumption is sluggish. There also is a positive prospective that oil prices would be stabilized after the Iraq war.
We are particularly alarmed that consumer prices are soaring when increases in international oil prices have yet to be reflected in commodity prices in Korea. On top of that, the war in Iraq has now dragged out longer than expected, and there is a strong possibility that won-dollar exchange rates will jump in the future.
When consumer prices rise, it especially afflicts the wage-earners and the lower-income bracket. The government’s policy to narrow the gap between the rich and the poor might be fruitless. The government, more than any other time, needs to make continual efforts to resolve structural factors that threaten consumers prices, while mobilizing short-term measures. Such major structural efforts involve transforming an industrial structure into an energy-efficient one, overhauling the distribution system for agricultural produce and liberalizing service markets to keep prices stable.