[Weekly Outlook] Will Inflation Rate Stay in the 3% Range...Focus on Per Capita National Income Announcement

Consumer Price Inflation Rate Stays in the 3% Range for 4 Consecutive Months... Bank of Korea Also Raises Its Forecast
Price-Related Ministers' Meeting on the 4th of Next Month... "Fuel Tax Cut Extension Needed if Necessary"
Will Per Capita GNI Surpass $35,000?... January Industrial Activity Trends to Be Announced

International Oil Prices Surge... Domestic Gasoline Prices Also Rise
(Seoul=Yonhap News) Reporter Son Hyung-joo = Due to geopolitical factors such as Russia's invasion of Ukraine, international oil prices have surged, leading to a simultaneous rise in domestic oil prices. On the afternoon of the 24th, gasoline was being sold at 2,290 won per liter at a gas station in downtown Seoul. 2022.2.24
2022331@yna.co.kr
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[Asia Economy Sejong=Reporter Lee Jun-hyung] The consumer price inflation rate for February will be announced next week. Due to the surge in international oil prices caused by the Ukraine crisis, the inflation rate is expected to remain in the 3% range for the fifth consecutive month. Among the economic indicators to be released next week, attention is also focused on whether the Gross National Income (GNI) per capita has reached $35,000.

The Statistics Korea will release this month's consumer price trends on the 4th of next month. The consumer price inflation rate has already recorded a 3% range for four consecutive months. Last month, consumer prices increased by 3.6% compared to the same period last year. With the continued rise in international oil prices and raw material costs, as well as the worsening global supply chain bottlenecks, it is analyzed that this month's inflation rate will also reach the 3% range.

The Bank of Korea also revised upward its consumer price inflation forecast to 3.1% for this year in the economic outlook announced on the 24th. This is 1.1 percentage points higher than the previous forecast (2%) announced in November last year. It is the first time in about 10 years since April 2012 (3.2%) that the Bank of Korea has forecasted a consumer price inflation rate in the 3% range for the current year. This indicates significant concerns about economic deterioration due to inflation.

Bank of Korea Monetary Policy Direction Press Briefing
(Seoul=Yonhap News) Lee Ju-yeol, Governor of the Bank of Korea, is speaking at the monetary policy direction press briefing held at the Bank of Korea in Jung-gu, Seoul on the morning of the 24th. 2022.2.24 [Provided by the Bank of Korea. Resale and DB prohibited]
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Extension of Fuel Tax Cut 'In Focus'

Accordingly, the government will hold a meeting of ministers related to prices chaired by Deputy Prime Minister and Minister of Economy and Finance Hong Nam-ki on the 4th of next month. Since this is the first such meeting in five years since 2017, attention is focused on how effective measures will be presented. The measures the government can use to stabilize prices include fuel tax cuts and freezing public utility charges.

Among these, whether the fuel tax cut will be extended is drawing attention. Previously, the government implemented a fuel tax cut in November last year, setting the deadline until April this year. The government has already hinted several times at the possibility of extending the fuel tax cut. This is due to the ongoing high oil price phase caused by geopolitical risks such as the Ukraine crisis.

Deputy Prime Minister Hong said on the 23rd during a visit to the Ulsan oil reserve base, "If the international oil price rise continues next month, it seems inevitable to extend the fuel tax cut." Minister of Trade, Industry and Energy Moon Seung-wook also stated on the 25th during an emergency inquiry at the National Assembly's Industry, Trade, and Small and Medium Enterprises Committee, "If unexpected variables occur, it is necessary to extend the period of the (fuel tax cut), and if additional measures are needed, discussions within the government are necessary."

Will Per Capita National Income Surpass $35,000?

The Bank of Korea will announce the '2021 Q4 and annual national income (provisional)' on the 2nd of next month. The key point is how much the per capita GNI increased last year. Due to the impact of COVID-19, the per capita GNI in 2020 was $31,755, a 1.1% decrease compared to the previous year ($32,115). However, the Bank of Korea expects that, supported by the economic recovery trend, last year's economic growth rate will remain in the world's top 10, and the per capita GNI will exceed $35,000. According to the preliminary figures released on the 25th of last month, the annual real Gross Domestic Product (GDP) growth rate last year was recorded at 4%.

Statistics Korea will release the first industrial activity trends of this year on the 2nd of next month. Attention is focused on how the COVID-19 Omicron variant affected industrial production indicators last month. Industrial production in December last year increased by 1.8% compared to the previous month. The retail sales index, which shows consumption trends, also rose by 2%.

Meanwhile, the government will continue to hold the 'Ukraine Crisis Emergency Response Task Force (TF)' daily next week. Through the TF, the government will monitor supply chain issues such as energy and raw materials, as well as the financial market situation. If necessary, emergency response plans by sector will be implemented. President Moon Jae-in instructed at a staff meeting held at the Blue House on the 24th, "Monitor the situation through the Ukraine Crisis Emergency Response TF and take preemptive measures."

This content was produced with the assistance of AI translation services.