Rocketing of Commodity Prices of Seoul Korea forced Expats to leave

Seoul South Korea inflation rate since November 2010 climb to its highest level and continue rising for 4.1% in February 1, 2011. South Korean inflation accelerated more than forecast in January 2011, breaching the Korea Central bank's 4 percent ceiling and adding to the case for another increase in borrowing costs as early as 2nd week of February.


The survey consumer price index rose 4.1 percent from a year earlier after gaining 3.5 percent in December is even understated since we have interviewed many expats says the rising of prices is almost doubled from January 2010 to January 2011. We have interviewed an expat worker of Hyundai Engineering "Denis Somoso" and he mentioned that before during the month of January 2010 his house heating maintenance will only reached up to around KRW 250,000.00/ month for an average use of 10 hour a day but now with lessen usage hour of 8.5 hour a day his house heating maintenance rose up to KRW 350,000.00 or an increase of 71% or almost doubled.


President Lee Myung Bak last month declared "war" on inflation, saying it must be contained at 3 percent to protect people on low incomes. The Bank of Korea reviews policy on Feb. 11 after joining Thailand and India in extending interest-rate increases in January, and with the base rate continuing to lag the pace of consumer-price growth.


Inflation Target


The won rose 0.56 percent to 1,116.20 per dollar as of 1:30 p.m. in Seoul, according to data compiled by Bloomberg. The Kospi share index gained 0.7 percent.


The Bank of Korea targets inflation of 2 percent to 4 percent through 2012 and aims for the midpoint of the range in the medium term. Governor Kim Choong Soo and the policy board raised the benchmark rate by a quarter of a percentage point in July, November and January this year from a record-low 2 percent to 2.75 percent. The median estimate in a Bloomberg News survey of 11 economists was for a 3.8 percent gain in inflation in January. Prices advanced 0.9 percent from December.


Consumer price inflation may exceed the government's 3 percent target this year, with pressure coming from rising raw material costs and accelerating inflation in China, Yoon Jong Won, director-general at the Ministry of Strategy and Finance, told reporters in Gwacheon today.


"Korea is entering a high growth, high inflation environment," Wai Ho Leong, a Singapore-based regional economist at Barclays Plc, said today in a report. "In view of the clearer signs of acceleration in the activity indicators and stronger pass through into core prices," the 11 February policy meeting "will be a very close call."


Leaving Expats


68% of 100 expats in Korea which we have interviewed are considering now of leaving Korea and find another place to live with a lower inflation and a lower cost of living. Some expatriates are now considering countries in Southeast Asia if they could find better opportunities in the Philippines and Thailand.