Both the inflation rate and the consumer price index (CPI) are maintaining high rates. Deputy Prime Minister Choo Kyung-ho maintained his previous forecast that the inflation rate would peak around October. According to Statistics Korea, the CPI was recorded at 6.0% in June, 6.3% in July, and 5.7% in August. This is the highest rate in 23 years. What is more serious is that the inflation is centering on items with high public sensitivity, such as agricultural and fishery products. As a result, the CPI for restaurant purchases in July recorded the highest rate in 30 years. 
To make matters worse, the exchange rates keep increasing and is currently the highest since 2009. On Sept. 23, one USD equaled 1,422 KRW. Most countries are struggling with the strength of the dollar. The reason why the U.S. alone looks different where the rest of the world is experiencing difficulties is because of the so-called “dollar smile theory”. The name dollar smile was coined because a graph of the USD value to the U.S. economy looks like a smile. This graph implies that when the U.S. economy both underperforms or outperforms, the dollar tends to be strong and increases in value compared to other currencies due to the demand for safe assets and the widening of the growth gap. Now, the U.S. economy is outperforming, while the Russo-Ukrainian War, the increase in money supply after COVID-19, and the U.S. interest rate hikes have caused a global economic downturn. 
Exchange rates and prices are interrelated. Exchange rates influence not only the prices of (final) products but also global raw material prices. If the exchange rates increase, the import price index also increases, which means that the CPI increases. This causality is powerful enough to influence each other even in the short term.
Some consumers are changing their consumption behavior significantly due to the high CPI. Among the MZ generation, the “No Spend Challenge” is trending, in which the expenditure for a day is zero. People put this challenge into practice by preparing lunch boxes or eating food at home. Socially disadvantaged people with less income are especially suffering from a high CPI, and they want to reduce their consumption. However, moderate consumption is an essential requirement for a strong and healthy economy. The government and monetary policy board should consider adjusting the interest rates to follow the U.S. interest rate.