Finance minister calls for policy focus on price stability

The government should put its policy priority on achieving price stability, the finance minister said Wednesday, expressing concerns about growing inflationary pressure stemming from soaring crude oil and international commodity prices.

Korea wants to keep its inflation of consumer prices at the 3 percent level this year, though many experts remain skeptical about the target. In January, the country's consumer prices soared 4.1 percent due mainly to agricultural and energy related costs.

In a meeting of senior economic policymakers, Finance Minister Yoon Jeung-hyun said both external and internal conditions are unfavorable for controlling consumer prices and stressed greater efforts by the government to contain inflationary pressure.

"The government is sending messages to the market that it will take steps to control price hikes, but recent developments in North Africa are taking their toll," he said.

International crude prices have surged past the $100 per barrel mark as concerns that violent anti-government protests in some North African countries could hurt the supply of oil.

Yoon also said that if companies compete to raise prices at this juncture because of overseas developments, this could have repercussions on the overall economy.

The country's chief economic policymaker said Seoul plans to do its part to tame inflation by lowering import tariffs on key products as a short term measure and move to revamp the local distribution system cited for fueling prices.

He, in addition, called on a government task force on addressing oil and communication-related price gains to produce a viable plan to help contain price gains.

The minister also said a rise in global crude and commodities prices could cause countries to cut back on spending and adopt austerity measures that could hurt ongoing global recovery and trade.

He said adjustments need to be made on establishing appropriate levels of state-held reserves for oil, staple grain products and mineral resources that have a direct bearing on inflation and the national economy.

Besides expanding reserves of vital commodities to cope with sudden fluctuations in prices, Seoul must pay close attention to releasing the reserves in a timely manner to help stem inflationary pressure, he said. (Yonhap)