A green light for the economy? Think again.

Statistics Korea released new data showing people’s tougher livelihood due to high inflation. Their real income shriveled 1.6 percent in the first quarter against the same period a year ago, the largest fall in seven years, according to a household income and expenditure survey of the statistics office. Nominal income increased slightly, but prices rose faster than that.

Real income from labor sank 3.9 percent on year, the biggest-ever drop since 2006, when the office started to reflect the income of single-person households in the calculation. The upset is owed mostly to a sharp fall in bonuses from large companies due to their poor business performances.

The Bank of Korea (BOK) last week froze the benchmark interest rate at 3.50 percent, unchanged for 16 months. The Monetary Policy Board of the central bank warned of higher inflationary risks, pointing to uncertainties in oil and farm produce prices. The BOK won’t likely move faster than its U.S. counterpart to bring down interest rates, as it must consider the high inflation, exchange rates and household debts. In short, the self-employed, small firms and debt-ridden economic agents must endure high money rates for longer.

Surprisingly, the economy gained 1.3 percent in the first quarter from the previous three-month period. The government welcomed this, saying it suggested a green light for the struggling economy. Economy-related ministerial meetings dropped the “emergency” prefix, reflecting the sanguine signs in the economy. The government attributed the development to a private sector-led growth with a balanced recovery of export and domestic consumption. But it owes mostly to chip manufacturing and exports rebounding.

The government should be wary of an illusion spiked by the good performance of chips over the past six months. Semiconductor exports surged 56 percent last month to reach $10 billion. The unexpected recovery of the chip business that accounts for more than 30 percent of Korea’s exports has driven growth. But the environment for domestic business remains wintry under high inflation, interest rates and the U.S. dollar exchange rate. BOK Gov. Rhee Chang-yong observed a gap between exports and domestic sales, as well as the “polarization of domestic demand.”

The decline in real household income poses a strong challenge for the government. It must pay greater attention to ordinary citizens’ worsening livelihoods without resorting to expedient cash handouts. A one-time cash stimulus can only fuel inflation and cut more into real incomes. Containing inflation should be the top priority of the government’s fiscal and monetary policy. Both the government and political circles must work hard to stop fanning inflationary expectations.