Monetary supply abuse and oil price rise are combined, leading to high prices and low growth due to stagflation.
Inflation in April rose 2.3% year-on-year and 0.2% year-on-month in the consumer price index, exceeding the Bank of Korea's stabilization target of 2.0%, and rents rose the most since December 2017.
In the rise of international oil prices, petroleum products rose 13.4% year-on-year and 1.5% year-on-year, and industrial product prices rose 2.3% year-on-year. The rise in oil prices and the expansion of money supply are showing low growth in high prices, leading to inflation.
The National Statistical Office's fresh food index for April rose 14.6% from the same month last year, and the price of green onions, the leading player of the surge, soared 270.0%, and fresh vegetables soared 19.4% from the same month last year.
The production capacity of the manufacturing industry, which was focused on export support, declined to -0.8% from the previous month, and automobile machinery equipment was further reduced in addition to the increase in semiconductor and electric equipment, and the average utilization rate of the manufacturing industry was 75.0%, down 2.4%p from the previous month.
In addition to an increase in petroleum refining (6.9%) and chemical products (3.0%), which led to an increase in prices in manufacturing shipments, automobiles (-3.2%) and electronic parts (-6.0%) declined 0.6% from the previous month, showing low growth.
The rising trend of the inflation index increased from 0.6% YoY in January to 1.1% in February and 1.5% in March, followed by 2.3% in April.
International oil prices declined to $15.06 per barrel in April of last year, in the beginning of the coronavirus, then rose to $35.49 in May, $39.27 in June, $61.5 in February this year, and $59.16 in March to $60 in April, and continued in the futures market. It looks upside down.
Regarding the rise in oil prices in an export-led economy, Professor Seong Tae-yoon (Yonsei University Department of Economics) said, "Inflation in other countries is the result of economic recovery, and in Korea, supply shocks caused by rising oil prices are a factor of inflation."
The consumer market where supply does not increase easily while the real economy continues to be sluggish, although the stock indices of bio-semiconductor stocks rebounded, increasing the supply of money from the beginning of the coronavirus, increasing the supply of housing and increasing demand. From the price in the upward trend.
The Bank of Korea's January market currency volume of 3,233 trillion won (M2) was the largest increase since the start of the statistics in December 2001, with an increase of 41 trillion won (1.3%) from the previous month.
M2 in January increased 10.1% year-on-year due to the expansion of the money supply over the past year, the highest since October 2009 (10.5%) of the financial crisis.
Since the end of last year, intensive credit supply expansion has led companies to secure liquidity rather than investment, increasing 24 trillion won, accumulating a record-high short-term deposit of bonds and stocks.
With financial support, households and non-profit organizations accumulate 4,7 trillion won, and 4,500 billion won in other financial institutions and 1.2 trillion won in social security and local governments.
In February of this year, the amount of money was soaring 41.8 trillion won (1.3%) from the previous month, and recorded a record high of 3,274 trillion won.
In the early days of the coronavirus, M2 increased from 3,000 trillion won in April last year to 3119 trillion won in September and 3191 trillion won in December. The largest increase in funds was concentrated in bank MMF and beneficiary securities stocks.