Rising living costs hit consumers hard in South Korea despite falling inflation

Consumers in South Korea have continued to face a significant burden from the rising living cost despite falling inflation and eased monetary policy.

Statistical office data showed that the consumer price index (CPI) in South Korea rose 1.6 percent in September from a year earlier, retreating below the central bank's mid-term inflation target of 2 percent for the first time since March 2021.

The headline inflation had roughly declined this year from 3.1 percent in February to 2.9 percent in April, 2.4 percent in June and 2.0 percent in August.

Despite the falling inflation, customers in the country are still under the pressure of high good prices, especially vegetable prices.

In September, agricultural product prices swelled 3.3 percent on a double-digit expansion in vegetable prices, which jumped 11.5 percent.

"I find It difficult to single out which goods have seen significant price increases, because the price of almost everything is going up. I feel that the price of vegetables and spices used in making side dishes has increased particularly. Recently I've purchased necessary items in smaller quantities and for multiple times, and my spending habits have become more cautious," said a customer at a supermarket.

To control the inflation, the central bank of South Korea has delivered policy rate hikes by 3.0 percentage points to 3.5 percent since January 2023.

The high policy rate and high inflation over the past three years have eroded the purchasing power of households and forced many companies to reduce investment, dragging down economic growth.

Last week, South Korea's central bank decided to slash the benchmark seven-day repurchase rate by a quarter percentage point to 3.25 percent, marking the  first rate cut by the Bank of Korea  in four years and reflecting a policy shift from combating inflation to boosting economic growth.

"With the level of household debt remaining high, cutting the policy rate by 25 basis points might not have much impact on boosting domestic demand [in South Korea], and it would still be difficult for households to increase their spending. Relevant departments in South Korea need to ramp up fiscal policy support, such as providing cash support for low-income households, or offering coupons to purchase goods," said Kim Sei-wan, a professor of economics of Ewha Womans University.

Rising living costs hit consumers hard in South Korea despite falling inflation

China's industrial production registered steady growth in the first three quarters of 2024, accompanied by a faster pace of intelligent and green transformation.

From January to September, the total value added of industrial enterprises above the designated size increased by 5.8 percent year-on-year.

Powered by innovation and green upgrades, industrial performance emerged as a key strength, contributing nearly 40 percent of the GDP in the first three quarters.

In terms of structural adjustments, the value added in equipment manufacturing and high-tech sectors grew by 7.5 percent and 9.1 percent, respectively, significantly surpassing the 5.8 percent growth rate for all designated large industrial enterprises. This shift reflects a transition toward a more efficient, technology-driven industrial model.

"During the first three quarters, the trend of industrial transformation towards 'new' and 'green' has become more obvious, with high-tech manufacturing thriving, intelligent products rapidly growing, the new energy industry continuously expanding, and the acceleration of shifting from old drivers of growth to new ones, becoming a significant force leading high-quality industrial development," said Han Jianfei, deputy director of the Institute of Industrial Economics of CCID Consulting, Ministry of Industry and Information Technology.

In the major equipment sector, the electronics and automotive sectors grew rapidly, with double-digit increases in the production of products such as new energy vehicles, integrated circuits, and 3D printing equipment, serving as important engines driving industrial growth.

In the first three quarters, there was a clear trend of industrial transformation and upgrading. Green products represented by the "three new products" (electric vehicles, lithium batteries and solar cells) gained significant momentum, with production continuing to grow at a double-digit rate.

Industries related to competitive new energy sources like wind power, nuclear power, and photovoltaic power maintained rapid production growth. Meanwhile, the added value of information transmission, software, information technology services, and digital product manufacturing has been growing rapidly, injecting new vitality into the high-quality development of China's industrial economy.

China's industrial production grows steadily in first three quarters