By Park Si-soo

Signs of inflation currently loom large and as some contributory factors originate outside South Korea, the government finds itself helpless to counter them.

The latest in a series of ominous signs are to be found in Europe. The European Union recently said it would impede shipments of crude oil to Asia from Iran from July by making it impossible for oil tankers subject to EU law to maintain insurance cover.

The EU has escalated sanctions on Iran, accused of pursuing nuclear ambitions, by putting an embargo on Iranian oil imports effective July 1. Moreover, there are bans on new shipping and insurance for Iranian crude.

The EU has taken the measures against one of its key oil suppliers in tandem with U.S.-led sanctions aimed at thwarting Teheran’s nuclear ambitions.

The scheduled ban is expected to put additional pressure on the government here to raise electricity charges, despite the fact that the nation is looking at ways of reducing dependency on Iranian crude, which accounted for 9.4 percent of crude oil imports last year.

The Ministry of Knowledge Economy is already deliberating whether or not to approve a request from the state-run Korea Electric Power Corp. (KEPCO)’s to raise electricity charges by a whopping 13.1 percent. Electricity charges are one of the biggest factors affecting inflation due to the knock-on effect on businesses that are forced to raise prices due to increased operating costs.

KEPCO claimed the increase is a must due to escalating net losses largely caused by the government’s intervention in price-setting. The power company registered a 3 trillion ($2.65 billion) net loss last year and 8 trillion won in cumulative deficit over the past four years.

Many analysts say the government might approve the increase to prevent a massive blackout which government officials say is a constant possibility during the sizzling summer months because of excess electricity use for air conditioning. The government has launched nationwide power-saving campaigns.

The ministry said it would make its final decision next month.

E1, one of the leading liquefied petroleum gas (LPG) suppliers, has already started charging consumers more. From May 1, the firm began to sell LPG for 1,854 won per kilogram, up 49 won.

“The increase is to make up for the snowballing deficit,” E1 said in a statement. “If we continue to provide LGP at the current price, we will soon be unable to supply LPG stably.”

Market insiders said other LGP suppliers, including SK Gas, are very likely to follow the same path.

Similar signs are emerging in the food industry. Suppliers of popular processed food items, such as boiled rice and canned tuna, have increased prices by up to eight percent.

The public sector is no exception. Seoul Metro, which operates subway line No.9, is at odds with Seoul City over its plan to increase subway fares to 1,550 won from the current 1,050 won.

The plan was temporarily put on hold amid public criticism, but it is the latest fallout due to measures taken by the government in both the private and public sector to rein inflation in.

“We are working hard and will continue to do so to stabilize the prices of living necessities,” Finance and Strategy Minister Bahk Jae-wan said last week. The minister expressed his reluctance to approve a price hike for public goods, saying, “We will try to relieve the pressure (to increase prices) by leading firms to have cost-efficient management structure.”