The specter of soaring inflation is haunting the nation as prices show signs of spiraling out of control in the wake of the presidential election.
This is because food companies feel it will be difficult to raise prices after a new government is launched in February and see the time after the presidential poll as the most opportune time for increasing prices.
Retailers say fresh food prices are rising sharply with cold snaps gripping the nation. And prices of processed foods like tofu and flour are also on their way up.
CJ CheilJedang, one of the country’s leading food producers, informed retailers that it would increase prices of 22 processed food products 8 to 10 percent. Hite-Jinro raised the factory price of soju, Korea’s distilled liquor, by 8.19 percent for the first time in four years over the weekend.
Public utility bills are being readjusted upward. Tolls for private-funded highways will rise by 100 to 400 won. Therefore, the toll for the Incheon International Airport Expressway will be hiked to 8,000 won from the present 7,700 won beginning Thursday.
The Ministry of Land, Transport and Maritime Affairs said bills for water in provincial cities will rise by 13.8 won per ton from Jan. 1. As a result, households will have to pay 141 won more per month on average in their water bills.
Basic fares for taxis are also expected to rise by 20 to 30 percent, depending on the region. In Busan, an agreement has already been reached on raising the basic taxi fare from 2,200 won to 2,800 won from Jan. 1 and in Seoul, negotiations are under way over a proposal by the taxi industry to lift the basic start fee to 3,200 won from the current 2,400 won.
This wave of price increases is certain to deal a decisive blow to the successful launch of the new administration led by Park Geun-hye who has vowed to prioritize people’s livelihoods during her campaigning.
True, consumer prices have been subdued in general in recent months but prices of fresh and processed foods have been unstable. Food prices in November were up 2.9 percent from a year ago, compared with a 1.6 percent rise in the overall consumer price index.
The Bank of Korea also said expenses for foodstuffs in the third quarter of this year accounted for 14.6 percent of consumer spending, the highest level in 11 years.
Against this backdrop, it’s not too much to say that price stability needs to be given top priority. This is all the more so, given the ever-worsening polarization in our society. For example, a report released last week by Statistics Korea showed that one out of six Koreans earn less than 10 million won a year.
If the past is any guide, it’s not easy to bring inflation under control. The Lee Myung-bak administration has been all-out to ensure price stability but its cosmetic policies have produced little.
Needless to say, the government should tighten control on companies that raise product prices exorbitantly without reflecting the positive impact on prices from the latest appreciation of the Korean currency. And harsh punishment must be in store for companies engaging in collusion or illicit price increases.
Most importantly, the new government must come up with durable measures that will let ordinary people live comfortably without worrying about inflation.