Firms Pressed to Lower Gasoline Price
By Lee Hyo-sik
Staff Reporter
The government is putting pressure on businesses to cut their prices of gasoline, ramyeon, bread and other daily necessities on recent falls in prices of international crude oil, grains and other commodities.
Companies sharply raised prices of various goods sold here over the past months by immediately reflecting rises in global oil and other raw materials costs. But despite recent drops in international commodity value, they have been slow to drop prices.
Vice Strategy and Finance Minister Kim Dong-soo said Tuesday that the government expects businesses to slash prices of ramyeon, bread and other food items made from flour as producers cut commodity prices by double digits over the past week amid falling global prices.
``Reflecting drops in flour prices, makers of ramyeon and bread should reduce their prices as well to ease financial burdens on households. Gas stations should also lower retail value of gasoline and other oil products immediately on falling global crude prices,'' Kim said.
Overnight, the West Texas Intermediate (WTI) for September delivery closed at $121.41 per barrel in New York, down $3.69 from last Friday's trading, as oil demand is projected to slump in the future as a result of a global economic slowdown. Other commodity prices also fell sharply as speculators pulled money out of the commodity market on expected falling global demand.
Prices of cocoa declined 9.5 percent on Monday to $2,712 per metric ton, the lowest level in six months. Also, prices of sugar and corn fell by more than 5 percent as a pessimistic outlook on global grain demand gained momentum.
Vice Minister Kim said the ministry will increase cooperation with other government bodies to closely monitor price movements of gasoline and diesel, as well as provide consumers with more precise price information.
``We will also clamp down on price collusion among makers of textbooks and school uniforms ahead of the fall semester. The government and the private sector should join hands together to remove factors that could put more upward pressure on inflation, as well as prevent price hikes from fueling wage growth,'' the vice minister stressed.
In July, consumer prices grew at their fastest pace in nearly 10 years, putting a heavier financial burden on businesses and households. According to the National Statistical Office (NSO), consumer prices rose 5.9 percent last month from a year earlier, up from a 5.5 percent gain the previous month.
The cost of living index, consisting of food and other daily necessities, jumped 7.1 percent from a year ago, meaning that consumers felt the inflation burden more heavily than the overall price increase, the highest level since May 2001 when prices also jumped 7.1 percent.
Among 52 daily necessities under government watch, prices of 26 items increased, while those of 10 dropped and 16 remained unchanged.