Lee Hyoung-il, the nominee for minister of finance and economy, speaks in a meeting with the press at the government complex in Sejong on Sept. 2.MINISTRY OF FINANCE AND ECONOMY
The Ministry of Finance and Economy will take more aggressive steps to tame inflation ahead of the Chuseok harvest holiday, said Lee Hyoung-il, the nominee for deputy prime minister and minister of finance and economy, as the country’s inflation rebounded in August after months of cooling.
The ministry will “work to announce additional measures to tame inflation [ahead of] the Chuseok harvest holiday, such as increasing supplies or expanding discounts [on key holiday items],” said Lee, who currently serves as the first vice finance minister, in a meeting with the press at the government complex in Sejong on Wednesday.
It was his first meeting with reporters since he was tapped to lead the ministry in a Cabinet reshuffle on Sunday.
The ministry will “look for additional measures” to tame inflation, Lee said, adding that “the government considers inflation its top mission. The remarks came a day after the government unveiled measures to stabilize livelihoods ahead of the Chuseok holiday, which begins on Sept. 24.
The measures included a record supply of 180,000 tons of key consumer goods, such as apples, pears and beef, ahead of the holiday period. The government also earmarked around 100 billion won ($73 million) to offer discounts of up to 50 percent on agricultural, livestock and fishery products.
Since the nomination was announced on Sunday, the vice minister has faced pressure from President Lee Jae Myung to tame inflation ahead of the holiday, when demand for food and other consumer goods typically rises.
President Lee jokingly warned at a Cabinet meeting on Tuesday that the nomination could be withdrawn if the government fails to rein in prices ahead of Chuseok, after asking the vice minister whether he was confident he could tackle the recurring spike in prices of holiday staples.
“Price stability is the foundation of a [healthy] household economy and the starting point for addressing polarization,” the nominee stressed on Wednesday, as the country grapples with K-shaped growth driven by a boom in the chip sector.
Despite the government's will, inflation jumped back above 3 percent in August, with government data on Wednesday showing that consumer prices climbed 3.1 percent from a year earlier.
It was an uptick from a 2.8 percent rise in July, following 3.1 percent and 3.2 percent increases in May and June, respectively. The country’s core inflation, which excludes volatile food and energy prices, advanced 3.4 percent on year in August, as sustained price jumps in personal services and durable goods were compounded by a base effect caused by a telecom fee discount last year. The figure marked its highest level since it advanced 3.8 percent in May 2023.
Lee said the uptick doesn’t signal mounting price pressure, noting that the increase in consumer prices would have been in the mid-2 percent range were it not for a steep telecom fee discount a year earlier following a data leak at SK Telecom.
Apples are for sale at a traditional market in Seoul on Sept. 1.YONHAP
Lee instead said the key to curbing inflation is how the conflict in the Middle East evolves, given its impact on oil prices, which feed directly into production costs across industries. “We expect inflationary pressures to ease once those factors are resolved,” he said.
The growth of consumer prices is projected to be slower in September than in August as the base effect fades, but the underlying upward trend is expected to continue, especially in core items, according to the Bank of Korea (BOK) on Wednesday.
“Consumer prices are likely to remain elevated, particularly for core inflation, as cost shocks filter through to prices and demand-side pressures build, while uncertainty over the Middle East conflict remains high,” BOK Deputy Gov. Lee Ji-ho said during a press meeting to review inflation trends.
The BOK’s Monetary Policy Board in August forecast that the country’s consumer inflation will rise 2.7 percent this year and 2.3 percent in 2027, leaving them unchanged from the May projection. Amid concerns over persistent inflationary pressures, the BOK raised its policy rate by a quarter of a percentage point at each of its July and August meetings, a rare move, bringing the rate up to 3 percent.
