Rising Prices and Tough Job Market... New Year's First Economic Pain Index Hits Record High

January Inflation Up 5.2%
Unemployment Rate Decreased but Employment Growth Also Slowed

[Asia Economy Reporter Joo Sang-don] While prices are rising sharply, incomes are not increasing, and employment growth is slowing, economic anxiety continues, leading to the economic hardship index reaching an all-time high for the same month last month.

According to an analysis of Statistics Korea data by Kim Hoe-jae, a member of the Democratic Party of Korea, on the 22nd, the economic hardship index in January this year was 8.8, the highest for January since the unemployment rate measurement standard changed in June 1999.

The economic hardship index was highest in July last year at 9.2. This was followed by February and March 2001 (each 9.1), June 2022, July 2008, and May 2001 (each 9.0), and April 2001 (8.9).

The economic hardship index is an indicator devised by American economist Arthur Okun. It is calculated by adding the unemployment rate and the consumer price inflation rate.

Last month, the unemployment rate was 3.6%, down 0.5 percentage points from a year earlier, but the inflation rate rose 1.6 percentage points to 5.2%, causing the economic hardship index to increase by 1.1 points.

The January unemployment rate rose 0.6 percentage points from December last year (3.0%) and 1.3 percentage points from November last year (2.3%). The number of unemployed also exceeded one million again last month at 1,024,000, the first time in a year since January last year (1,143,000).

The inflation rate peaked at 6.3% in July last year, then eased to 5.7% in August, 5.6% in September, 5.7% in October, and 5.0% in November and December. However, due to factors such as electricity rate hikes, the inflation rate surged again last month.

By region, last month’s economic hardship index was highest in Gangwon (13.2), followed by Incheon (9.9), Gyeongnam and Jeonnam (9.7), Chungbuk and Daegu (9.6), Ulsan (9.4), Chungnam (9.0), Gyeongbuk (8.9), Jeonbuk (8.7), Busan and Seoul (8.5), Daejeon (8.4), Jeju (8.1), and Gyeonggi and Gwangju (7.9).

On the 16th, when the warm weather continues, spring clothes are displayed in the shop window of a clothing store in Myeongdong, Seoul. Photo by Jinhyung Kang aymsdream@

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