The consumer price inflation rate exceeded the mid-2% range for two consecutive quarters, and the government announced that inflation will continue since October, predicting an increase for three consecutive quarters, followed by a decline in the stock market in October.
The CPI rose from 0.6% in January, 1.1% in February and 1.5% in March to 2.3% in April, 2.6% in May, 2.4% in June, 2.6% in July, 2.6% in August, and 2.5% in September. It exceeded the mid-2% level for two consecutive months. The consumer price index exceeded the 2% level for two consecutive quarters from August 2009 (2.2%) to June 2012 (2.2%), right after expanding the money supply during the 2008 financial crisis. So, the rate of increase is much higher than at that time.
In a press release on the 6th, the Ministry of Strategy and Finance said, “The consumer price index in October is expected to increase due to the base effect of the communication cost support in October last year. It is also aggravating the situation,” he said.
Kim Yong-beom, the first vice minister of the Ministry of Strategy and Finance, said on March 12, “Inflation was exceptionally low in the second quarter of last year. In the second quarter of this year, there is a possibility that the inflation rate will be temporarily high.” He said, “Considering the slowing AI spread and the seasonal characteristics of the harvest season, the price of a table will gradually stabilize.” The inflation rate this year was maintained at 1.8%.
Deputy Prime Minister Hong Nam-ki revised this year's inflation rate during a government audit on the 5th, saying, "It will not be easy to achieve 1.8%, and the level around 2% is probably the next best thing."
U.S. Treasury Secretary Janet Yellen said on the 5th that "supply bottlenecks have deepened and increased inflationary pressures. I think it will be temporary, but that doesn't mean it's going to go away in the next few months," the Fed chairman said. He rejected the 'temporary inflation' announcement he had been sticking to. "Nearly 6 million people were unemployed during the pandemic, while many companies are struggling to find employment. It has been through a transition," he said in an interview with CNBC about lasting several months of inflation caused by a 'supply bottleneck'. In September, the consumer price index for petroleum products rose by 22.0% (compared to the same month of the previous year), while industrial products rose by 3.4%, livestock and fishery products rose by 3.7%, and the living price index rose by 3.1%.
On the 22nd of last month, the OECD announced the Korean economic growth rate to be 4.0%, 0.2 percentage points higher than the previous forecast (3.8%) four months ago. He warned of signs of inflation.
While promoting the Moon Jae-in administration's upward revision of the economic growth rate to 4%, the annual inflation target was kept below 2.0%, while the Ministry of Strategy and Finance announced only 4.2% and the Bank of Korea 4.0%.
On the 26th of last month, the Bank of Korea revised the consumer price inflation rate for this year to 2.1%, 0.3 percentage points higher than the previous (May, 1.8%) in the 'Adjusted Economic Outlook'.
As for the industrial activity trend in August, the overall industrial production index decreased by 0.2% from the previous month, the service industry production also decreased for the first time in three months since May (-0.4%), and the retail sales index also decreased by 0.8% from the previous month. (-0.5%) was larger than the decrease, and facility investment decreased by a whopping 5.1% from the previous month, showing a recession-type triple decrease.
The cyclical variability of the leading economic index in the economic situation forecast of the National Statistical Office was 102.4 in August, down 0.3p from the previous month, the continuous decline following July.
August statistics show that construction orders and the KOSPI increased, but the inventory circulation index, the import/export price ratio, etc. decreased to a level where the stock market fell sharply in October.
In the US, the Nasdaq index, which focuses on tech stocks, fell 2.14% on the 5th and the 10-year Treasury bond yield rose from 1.47% to 1.49%.
The Nasdaq rose 1.25% on the 6th, and the 10-year government bond yield rose by more than 5bp to trade at the 1.533% level.
On the 5th, the KOSPI index fell below the 3,000 line to 2,962.17, down 1.89% from the battlefield, and foreigners net sold 621.1 billion won.
Large-cap stocks Samsung Electronics (-1.37%) SK Hynix (-2.10%) Naver (-3.01%) Samsung Biologics (-7.20%) LG Chem (-2.99%) Kakao (-4.72%) led the decline, followed by foreigners This concentrated sell.
At 11 am on the 6th, the KOSPI index fell 0.62% from the previous day and the KOSDAQ index rose 0.10%, but the bio stocks fell further and only Jinwon Life Sciences, which is conducting vaccine trials, rose.