SEOUL, Jan. 3 (Yonhap) — Finance Minister Hong Nam-ki said Monday that the government must mobilize all available policy resources to tame inflationary pressures and stabilize the housing market in the new year.
Hong also said the country will prioritize supporting small traders hard hit by the COVID-19 pandemic and vulnerable people, and strengthening social safety nets.
“The government faces an urgent need to stabilize inflation and the housing market at an early stage by using all available resources,” Hong said.
Consumer inflation in South Korea grew at the fastest pace in 10 years last year due to rising energy costs and high prices of agricultural products.
Consumer prices rose 2.5 percent year-on-year in 2021, up from a 0.5 percent increase in the previous year. It was the fastest year-on-year increase since 2011, when consumer inflation rose 4 percent.
Inflation growth is expected to slow this year compared to last year, but consumer prices are expected to fluctuate around 2 percent due to global supply bottlenecks, high oil prices and the economic recovery.
The Bank of Korea (BOK) estimated the inflation outlook for 2022 at 2 percent. The Ministry of Finance expects consumer prices to rise by 2.2 percent next year.
The country’s house prices have stabilized somewhat in recent months as a result of tighter lending rules and the central bank’s rate hikes. But the housing market remains volatile, largely due to an imbalance between supply and demand for housing.
The BOK said in its semi-annual report on financial stability that a rise in house prices and high household debt pose major potential risks to financial stability.