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Economic misery index hit all-time high for January last month
By Yi Whan-woo
The degree of economic distress felt by Koreans has exacerbated quickly, as a toxic mixture of high inflation and unemployment deals a blow to their daily lives, data showed Wednesday.
Released by Rep. Kim Hoi-jae of the main opposition Democratic Party of Korea (DPK), the economic misery index ― a measurement of the financial well-being of a country's citizens calculated by adding the seasonally adjusted inflation rate to the unemployment rate ― stood at 8.8 percent in January.
The index, compiled by Statistics Korea, marked the highest level for the month of January since June 1999 when the statistics agency adopted a new way to collect relevant data.
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Developed by U.S. economist Arthur Okun in the 1960s, the index assesses the impact of a high cost of living and a high jobless rate on the economic well-being of people.
Last month's data came as inflation rose to a three-month high of 5.2 percent in January, after growing at 5 percent in November and December, respectively.
The unemployment rate was at 3.6 percent last month, as jobs grew at the slowest pace in 22 months and the number of unemployed people surpassed the 1 million mark for the first time since January of 2022.
"In January, there are usually more people without jobs than the rest of the year, but even so, the 2023 index is seen as serious in nature because inflation appears to be on an upward course and thus can dent the job market in the months to come," said Lee Sang-ho, head of the economic policy team at the Korea Economic Research Institute (KERI).
Lee noted that January's inflation figure beats the government's expectation that consumer price growth will taper and eventually drop to the 2023 target range of 3 percent.
Asked whether the economic misery index can get worse, Joo Won, deputy director of the Hyundai Research Institute, said, "Such a possibility should not be ruled out."
He pointed out that job growth has been slowing for eighth consecutive months as of January, while the cost of living is feared to rise further.
Electricity prices were hiked by a four-decade-high of 9.5 percent in January, while gas prices are set to rise beginning in April.
Additionally, Seoul and other major municipalities plan to increase public transportation fares in the second half of the year. The planned hikes were set to be implemented this spring, but have been temporarily postponed by the government's urgent need to tame inflation.
The all-time high for the economic misery index was set in July 2022 at 9.2 percent.
The index stood at 9.1 percent respectively for February and March of 2001, 9 percent in May 2001, July 2008 and June 2022 and 8.9 percent in April 2001.
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