Hankyung Research Institute "Due to Soaring Prices... Q1 National Pain Index Highest in 7 Years"

[Asia Economy Reporter Park Sun-mi] An analysis has emerged that the National Pain Index in the first quarter of this year soared to the highest level since statistics began, due to the surge in inflation.

On the 5th, the Korea Economic Research Institute (hereinafter KERI) announced that the index for the first quarter of this year recorded 10.6, marking the highest level since the statistics began in the first quarter of 2015. The National Pain Index of 10.6 in the first quarter of this year is 1.38 times the average pain index of 7.7 during the analysis period from the first quarter of 2015 to the first quarter of 2022.

The National Pain Index is calculated by adding the consumer price inflation rate to the unemployment rate. KERI used the ‘expanded unemployment rate,’ which counts the unemployed plus ‘time-related additional job seekers’ as unemployed, as the unemployment rate statistic necessary for calculating the National Pain Index.

KERI analyzed that the consumer price index is still showing a relatively moderate rise compared to the producer price index because "companies are absorbing part of the cost burden caused by the sharp rise in international raw material prices themselves." They expressed concern that if the surge in raw material prices continues, companies’ capacity to absorb cost burdens will weaken, and consumer prices are likely to show a steep rise similar to producer prices.

Choo Kwang-ho, Director of Economic Policy at KERI, said, “If the National Pain Index rises, there is a risk of falling into a vicious cycle where economic downturns such as reduced consumption lead to increased unemployment, which in turn raises the National Pain Index again.” He added, “Given the limited fiscal capacity and the weak financial resilience of the private sector, there are limits to macroeconomic policy operations. Therefore, it is necessary to stabilize prices and create more quality jobs by expanding the economy’s total supply capacity through revitalizing corporate vitality.”

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