"Rising Inflation Drives Government's Quick Fixes… 'U.S. Tariffs Might Trigger Economic Downturn'"

# Structural Inflation and Surging Living Costs Grasp South Korean Households As inflation climbs and living costs soar, particularly in dining, South Korean households face increasing economic pressure. The government has swiftly allocated a supplementary budget to address this in the short term, but concerns persist that inflationary forces may continue, exacerbated by U.S. high tariffs and a slowing global economy. ## Four Months of Rising Consumer Prices Highlight Structural Inflation Data from South Korea's Ministry of Economy and Finance show that the Consumer Price Index (CPI) for April rose 2.1% year-over-year. Last year saw consumer price growth hit 3% early on before dropping to 1% in the latter half. Yet, this year has consistently seen the CPI at 2% with January at 2.2%, February at 2.0%, March at 2.1%, and April again at 2.1%. Underlying inflation, excluding volatile food and energy prices and reflecting fundamental price trends, accelerated to 2.1% in April from 1.8% in February. Key factors include the South Korean won's depreciation and U.S. tariff policies, intensifying price pressures. This ongoing rise in underlying inflation suggests that the economy faces structural inflation rather than temporary price fluctuations. ## Soaring Living Costs: "Grocery Shopping Now Feels Daunting" Essential and dining costs have surged, heavily burdening households and maintaining high inflation. According to the Korea Consumer Agency, popular food items' prices have sharply risen. In April, a roll of kimbap in Seoul averaged 3,623 KRW—up 0.6% from the previous month. Kalguksu (knife-cut noodles) and samgyetang (ginseng chicken soup) prices increased by 1.6% and 0.9%, respectively, with pork belly (200g) climbing 0.8%. Year-over-year, these increases are even more significant: kimbap (4.4%), jajangmyeon (black bean noodles, 3.4%), kalguksu (3.0%), and naengmyeon (cold noodles, 2.7%) prices have all surged. Prices for essential ingredients like radishes (up 41.0%), onions (17.5%), peeled garlic (37.7%), and eggs (5.1%) continue climbing, adding to consumer strain. "I only manage a simple kimbap and instant noodles lunch at 7,000 KRW," said Park, a 32-year-old office worker from Pyeongtaek. "Grocery shopping makes me anxious—I second-guess every purchase at the counter." Lee Jindong, 29, an employee in Seoul’s Yeongdeungpo District, echoed this: "Food inflation is so severe that my colleagues and I share homemade lunches twice a week," he noted. "Dining out feels like a luxury now." ## Government Allocates $90 Million to Stabilize Grocery Costs In response to rising living costs, the South Korean government has deployed extraordinary measures to stabilize grocery prices. On May 16, under Deputy Minister Kim Beom-seok, the government announced an expanded agricultural discounts program using a 120 billion KRW ($90 million) supplementary budget. From May 22 to June 4, consumers will receive up to 40% discounts on locally produced agricultural products purchased via online and offline retailers nationwide. Additionally, 450 tons of garlic from national reserves will be released by May 19 to counter shortages and stabilize prices. To address seasonal fishery supply disruptions, supplies of cutlassfish (500 tons) and squid (700 tons) will increase. In the meat sector, discount programs funded by producer associations will run through the end of May, and tariffs on imported pork for processed products like ham and sausages will be temporarily reduced. ## Experts Warn of Prolonged High Inflation Amid U.S. Tariff Policies Despite these efforts, doubts linger about the government's capacity for sustainable price stability. The combination of domestic consumption slumps and persistent U.S. tariffs places South Korea’s economy in a precarious spot. Although recent U.S. agreements with the UK and China have raised hopes, a 10% baseline tariff persists. Economists worry that this high-inflation environment will continue long-term. On May 13, the Korea Institute for International Economic Policy (KIEP) lowered its global economic growth forecast from 3.0% to 2.7%, citing U.S. protectionism and sustained high tariffs. “Temporary tariff relief may ease tensions slightly, but tariffs remain much higher than before, pressuring the global economy,” said Yoon Sangha, Chief of International Macroeconomic Finance at KIEP. He warned that persistent tariff policies could disrupt supply chains, hinder investments, and affect economic indicators into 2024. Experts argue that while short-term measures like discounts and subsidies are beneficial, long-lasting protection against inflation requires broader strategies. These include diversifying supply chains, restructuring import costs, and strategic U.S.-South Korea tariff negotiations. Andong-hyun, an economics professor at Seoul National University, cautioned, "Without decisive government action, prolonged high inflation could become normalized, leading to a bleak economic era." He emphasized that while immediate discount programs and price-control measures help, long-term resolution lies in successful U.S. tariff negotiations. "A long-term strategy across successive administrations, alongside supply chain diversification and addressing structural import costs, is essential," he concluded.