|President Yoon Suk-yeol holds a cabbage as he talks with a shopper at Hanaro Mart, a discount store chain, in southern Seoul, Thursday, when his government announced a set of measures to curb prices on items in high demand for Chuseok in September. Yonhap|
By Yi Whan-woo
The record rainfall witnessed this week is feared to further accelerate inflation in the lead up to Chuseok as the unexpected downpour compounds unfavorable harvest conditions and disrupts the supply of agricultural goods.
Around Chuseok, a traditional mid-autumn holiday in Korea, prices normally rise as many people go shopping to prepare festive dishes. It falls this year on Sept. 10.
Under the circumstance, the heaviest rainfall witnessed in eight decades that flooded Seoul and its surrounding areas this week has led to devastating losses at farms in the regions.
For farms in other regions, a drought during spring and summer monsoons that increasingly became irregular due to climate change are delaying the harvest.
According to data compiled by the government-affiliated Korea Agro?Fisheries & Food Trade Corp, many of the 13 high-demand items used to make Chuseok dishes saw more than a 50 percent increase in their prices as of Aug. 11 from the same period last year.
The 13 are cabbages, radishes, garlic, onions, potatoes, apples, pears, chestnuts, jujube, eggs, poultry, beef and pork.
By item, the price of cabbages jumped by 76.8 percent, radishes, 65.6 percent and onions, 64.5 percent.
The data did not reflect the flood and the pace of price increase could be steeper, according to market observers.
"Taking these negative factors into account, it can be said the inflation may not peak in October at the latest and continue to rise instead," said Jeong Chul-jin, an economist.
He referred to a recent outlook by Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho that consumer prices will reach the highest level between September and October.
Accordingly, the Ministry of Economy and Finance and the Bank of Korea (BOK) forecast that the pace of inflation will slow down after hitting a near 24-year high of 6.3 percent in July.
"While the exact damage of the flood on the economy has not been figured out, there is a high possibility of it putting upward pressure on inflation," Jeong said.
On Thursday, the Yoon Suk-yeol administration announced a set of measures to curb the prices of Chuseok-related goods.
Such measures have been made prior to every Chuseok. But they were announced earlier in the past, demonstrating the serious nature of inflation this time.
The Yoon government plans to supply a combined 230,000 tons of 20 different farm, livestock and fisheries products for three weeks before Chuseok, with a goal of lowering the average prices of the 20 items by 7.1 percent from current levels.
It also plans to spend a record 65 billion won ($50 million) to provide discount coupons for the purchase of the targeted items.
A separate amount of 42.6 trillion won will be provided to small firms and merchants to help them meet cash demand ahead of the holiday.