On the 11th, the Bank of Korea analyzed that concerns about inflation rising due to increased liquidity and anticipation for economic improvement following the new coronavirus infection (Corona 19) vaccination were “limited”. Given the uncertainty of Corona 19 and the continued sluggish employment, the possibility of continued inflation expansion is not high. However, he pointed out that it is necessary to be wary of the possibility that inflation will increase more than expected due to the impact of supply shocks such as an eruption of demand that has been suppressed (pent-up effect) and rising international raw material prices.
The BOK released a monetary credit report containing these details on the same day and said, “The uncertainty caused by Corona 19 is still high, but the possibility of rapid inflation expansion seems to be limited.”
According to the consumer price trend of the National Statistical Office on the 4th, the consumer price index for February was 107.00 (2015 = 100), up 1.1% from the same month last year. It is the highest rate of increase since February last year (1.1%). The photo shows a vegetable store at a supermarket in downtown Seoul on that day. /yunhap news
The report said, “The recent increase in inflation expectations and short-term inflation expectations amid expectations for economic improvement, such as vaccination, has led to discussions on the possibility of expanding inflation in the future.” They generally agree on the fact that this can increase, but opinions are mixed on the direction of mid- to long-term inflation,” he analyzed.
In fact, some are predicting that inflation will increase as large fiscal expenditures, resulting in increased liquidity, and weakening of the global supply chain (GVC) act as upward pressure. However, given the stable long-term inflation expectations, the central bank’s countermeasures against inflation, and the continued sluggish employment, there are also forecasts that the possibility of continued inflation expansion is unlikely.
The report said, “However, the inflationary pressure may temporarily increase due to economic recovery, normalization of economic activity, and the outburst of suppressed demand, and the possibility of inflation such as rising international raw material prices cannot be ruled out. There is,” he analyzed.
