By Kang Seung-woo
Korea will freeze public service charges in its broad range of anti-inflation measures, the government announced Thursday.
The government will also ask colleges to freeze their tuition fees, while monitoring prices of key daily items used widely by low-income households.
The comprehensive action came as Asia’s fourth-largest economy is faced with growing inflationary pressure, echoing the government’s jitters that price instability could undercut a sustained economy recovery.
Last year, the nation’s consumer prices rose 2.9 percent, which is relatively low compared to those of other major economies, but fresh food prices jumped 21.3 percent from the previous year, while its inflation of the producer price index (PPI), a bellwether for future consumer inflation, rose to a two-year high, gaining 5.3 percent last month from a year ago.
“Price stability should come first before other objectives such as sustained economic growth and recovery of economic sentiment felt by ordinary people. But things remain tougher than any other year,” said a report jointly compiled by nine government ministries.
“We expect inflationary pressure will build up especially during the first quarter when there are many price hike factors such as college tuition and other products.”
Strategy and Finance Minister Yoon Jeung-hyun said that the government will focus all of its policy capacity to control prices during the first half by using every possible measure.
“Price conditions for this year will be tougher than expected, as we still have internal and external uncertainties such as international raw material prices, the property market, European financial crisis and geopolitical risks,” he said in a joint press conference.
“If we fail to ease inflationary pressure in terms of supply and provision, worries over inflation will deepen and prompt price hikes, which will eventually weaken the fundamentals of our economy. Therefore, the government has decided to strongly deal with recent inflation.”
In its efforts to curb growing prices, the government said that it will freeze prices for 11 public service charges, including electricity, gas and mail services during the first half of the year.
In addition, it will keep public college tuition on hold this year and call for private schools to refrain from raising fees by more than 3 percent from the preceding year.
The government said that it will frontload its produce stockpile into the market in its effort to keep growing food prices in check, while cutting tariffs imposed on sugar, corn, wheat and others to drive down daily products. The move is aimed at mitigating price hikes of food and other produce, whose harvests were seriously affected by an unusual cold spell.
The government added that it will beef up the supply of new apartments earlier than planned, and rent out unsold apartments of government-owned builders to low-income households.