More Services Fee Hikes Planned
By Yoon Ja-young
Staff Reporter
More public services fees are expected to rise in the latter half, adding to the burden on households.
A number of local governments are set to raise public transport fares after freezing them last year. However, snowballing deficits following global oil price hikes are pushing them to pass on the cost to consumers.
The central administration had been determined to keep transport fares in check, but some local governments have seen billions of won in deficits at bus companies due to this. The government also changed its position recently, announcing there will be price hikes for gas and electricity.
The government is planning to raise wholesale prices of city gas by 30 percent for households and 50 percent for industries from August, which will lead to retail price increases. Electricity fees, which will be raised in August, will likely have another hike next year.
The price hikes are expected to have a huge effect on inflation, as these public services are indispensable, and are likely to lead to increases in other public sector fees including subway fares.
The government's inflation target of 4.5 percent is likely to be hard to obtain due to the hikes. The Bank of Korea's outlook of 4.8 percent consumer price hike is based on the estimation that electricity and gas fees will be frozen in the latter half.
Consumer prices rose 5.5 percent in June from a year ago, the highest level in a decade. Prices of imported goods rose 49 percent.
Analysts worry that inflation will push up wages, which in turn could lead to consumer price increases.
The governing Grand National Party (GNP) has made it clear that it opposes any government plan to raise public services fees. ``The government should take any measure to relieve the pain of the working class, instead of blaming outside factors,'' the party said in a statement Friday.
Job creation stood at 147,000, the lowest level in 40 months, adding to concerns that the economy is falling into stagflation.