Reported 8 months ago
According to a study by the South Korean central bank, the population's strong preference for luxury brand products is causing higher inflation in the country compared to other developed nations, making it challenging to control living costs. The study shows that the high demand for luxury goods weakens price elasticity and helps global distributors consolidate their sales in the local market. With high-end brand sales concentrated in upscale department stores charging high fees, foreign fashion businesses often set higher prices in South Korea, where only 3% of purchases by department stores come directly from manufacturers. This trend has led to limited effectiveness of monetary policy due to the high price levels, as noted by the South Korean central bank's governor, Lee Chang-kyung, emphasizing that the country's high cost of living is a problem that cannot be solved solely through monetary policy.
Source: YAHOO