While the government took an approach to induce high inflation by choosing to stimulate the economy by relying on fiscal expansion despite increasing inflationary pressure, the United States chose to respond to inflation when wage growth fell far short of inflation.
President Yoon Seok-yeol said at a macro-financial review meeting on the 13th, "The financial and foreign exchange market volatility is increasing due to the aftermath of the corona pandemic, disruptions to global supply chains, inflation, and monetary policy responses in each country, and there are concerns about a shift in the trade balance and a slowdown in the real economy." .
At a macro-financial review meeting presided over by the president, Choi Jae-young, head of the center, said, "The global economy is very unstable and is at a crossroads whether it will enter a crisis phase." Concerns about stagflation, which are stagnating as the economy cannot catch on, are gradually increasing, and the financial market is also shaken significantly.”
The Ministry of Strategy and Finance started releasing more than 10% of the annual budget at once through the 59 trillion won fiscal support policy, even after confirming the 'increasing global inflationary pressure' in the 'May Economic Trends' (Green Book).
The government started to stimulate inflation and the real estate market by releasing 10% of the 3% budget of the annual GDP to the market at once with a total of 59.4 trillion won in the supplementary budget on the 12th.
Korea's consumer price index rose 4.1% in March and 4.8% in April, and is expected to reach the 5% level in May.
The maximum inflation rate in Korea was 4.8% in October 2008 at the time of the financial crisis.
The government Green Book's core price index rose 3.6% in May, a larger increase than the 3.3% increase in March.
The government's diagnosis said, "There are concerns about sluggish investment and restrictions on export recovery due to the Ukraine crisis and prolonged disruptions in the supply chain, and the inflation rate continues to expand. announced the rise.
However, the government released an all-time high of 60 trillion won into the market, saying, “We will focus our policy capabilities on stabilizing the livelihood of the people, such as easing the burden of inflation, such as the low-income class and the vulnerable, and promptly supporting the second supplementary budget for the recovery of damage to small businesses.”
In the U.S., the Consumer Price Index (CPI) rose 8.3% from the same month in April, maintaining high inflation at 8% in a row following March (8.5%). The increase confirmed the expansion of the service sector in the high price system.
The U.S. Department of Commerce's inflation response policy was formalized as the average hourly wage for private sector workers rose 5.5% year-over-year in April, but slower than the 5.6% increase in March and widening the gap with the 8.3% rate of inflation in April.
US President Joe Biden said on the 11th that "inflation is the top priority in domestic policy," and the US Federal Reserve raised the interest rate by 0.5 percentage points in May following the previous rate hike in March.
The cyclical change in the government's leading composite index was 99.5, down 0.3 points from the previous month, and has been falling for the ninth month since July last year.
Rep. Jang Hye-young of the Justice Party announced on the 12th of last month that real estate financial exposure as of last year was 2,566 trillion won, a 12.4% (283 trillion won) increase from the previous year, which was 125% of GDP. It said that it has increased by 23.5%p over the past four years.