[Editorial] Recovering Economy, Unstable Prices, and the Suffering People

There’s talk of a new spring of economic recovery, but the common people still feel the chill of winter. Even if the economy does revive, the reality is that its warmth will reach them last of all. And with prices for living necessaries greatly on the rise, affliction is preceding the effects of an economic revitalization.

In February, the price of 156 everyday items, including rice and vegetables, rose by 4.9 percent over the same time last year. This far exceeds the overall consumer price index (CPI) increase of 3.3 percent. The exorbitant rise is due to the fact that everyday necessaries like agricultural produce, marine products, and utilities have jumped in price. The felt economic misery index, combining the CPI with felt unemployment rates, for last year was 11.5, greatly increased from 10.3 in 2003. Since income remains at a similar level while necessary expenditures rise, it’s inevitably spelling greater misery for the common people.

Unfortunately, there are further threats to price stability. International prices for oil and raw materials have been breaking records everyday since the beginning of 2005, pushing the price of manufactured goods and utilities even higher. In certain areas of Korea, a series of hikes in bus and taxi fares are anticipated. If the government begins actively taking various measures to stimulate the economy through comprehensive investment plans and the early implementation of the budget, it will become difficult to rule out the possibility of an inflation fueled by supply.

The signs of economic recovery are becoming increasingly clear from corporate business predictions and department store sales. If such hopeful developments are to benefit the common people, price stabilization is absolutely crucial.

The government must concentrate its administrative capacity on stabilizing the prices of everyday necessities. Equally important is price stabilization for oil and raw materials. The Bank of Korea might consider changing the objective of its interest rate policy from growth to price stabilization.

Ensuring that the common people, who have suffered the most from the economic recession of the past two years, do not become the victims of inflation instead of reaping the benefits of economic recovery is one sure way of alleviating social polarization. Economic recovery must not become the exclusive luxury of the privileged classes.