The Bank of Korea attributed the growing public perception of high prices to a sharp rise in living expenses since the COVID-19 pandemic, despite the overall inflation rate remaining around 2 percent.
In a report titled “Assessment of the Implementation Status of the Price Stability Target,” the central bank said that consumer prices and core inflation, which excludes food and energy, remained close to the 2 percent target from January through June. However, it noted that the financial burden on households has grown as living expenses have risen sharply during the same period. Since the end of 2019, consumer prices have increased by 15.9 percent, while living expenses jumped 19.1 percent and food prices surged 22.9 percent.
South Korea’s essential goods prices are also high compared to other advanced economies. Based on 2023 data from the Organisation for Economic Co-operation and Development, with an OECD average set at 100, South Korea scored 161 for clothing, 156 for food and 123 for housing.
From 2021 to May 2024, the cumulative rise in the cost of living was 19.1 percent, outpacing the overall increase in consumer prices by 3.2 percentage points.
Further adding to the strain is the widening gap in real estate prices between Seoul and other regions. South Korea’s housing price polarization index, which measures the ratio of housing prices in major cities to the national average, is nearing 1.5 and now exceeds the levels seen in China and Japan.
This gap is widening as more young people migrate to the Seoul metropolitan area. Rising demand in the capital contrasts with falling demand and increasing supply in non-metropolitan regions. As of March, the average perceived monthly cost of homeownership nationwide was 1 million won. In Seoul, it reached 2.29 million won, nearly 4.7 times higher than South Jeolla Province, where the cost was the lowest at 490,000 won.
홍석호 기자 will@donga.com