Falling Consumer Prices Signal Deflation
02 October, 2019
Consumer prices have declined for a second month running, a first for the country's economy.
This adds to the woes of the country's economy, which shrank in the first quarter for the first time in a decade, while major economic indicators are sending ominous signs.
According to Statistics Korea on Tuesday, consumer prices fell 0.4 percent in September compared to the same month of 2018.
They fell for the first time in August, if only by 0.04 percent. Even in 1999, right after the Asian financial crisis, consumer prices remained flat but never declined.
A woman shops for groceries in a supermarket in Seoul on Tuesday. /Yonhap
The government said a drop in prices of agricultural produce and the scrapping of tuition fees for high schoolers were the main causes and projected prices will stay flat till the end of the year.
But some experts fear persistent deflation. Sung Tae-yoon at Yonsei University said, "I think that deflation has already set in amid sluggish consumption. Economic growth will highly likely drop below 2 percent this year."
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