MINISTRY OF STRATEGY AND FINANCE
www.mosf.go.kr
Embargo: Release Date: June 03
Contact Information: Kim Hyun-ik (02-2150- 2772/ Price Policy Division)
G OVERNMENT TO B OOST M EASURES FOR S TABILIZATION OF C ONSUMER P RICES
The Ministry of Strategy and Finance held a meeting on June 3 to discuss its continuing efforts to stabilize prices, including closer management of the country’s tariff quota system in the second half of the year. The meeting also discussed the strengthening of policy measures to stabilize prices of processed food and personal service charges such as security deposits for housing and costs for eating out.
In May, consumer prices stayed at a high level of 4% so the government will continue its effort to keep prices stable and mitigate the burden felt by ordinary citizens. Gradual stabilization is expected because last month there was no change in the level for the second month in a row.
Regarding shipments, the fluctuation of prices is gradually easing as prices of agricultural and livestock products continue to fall with the improvement of weather conditions and increased shipments of goods to markets, and oil prices are stabilizing as well. In particular, there was a sharp drop in prices of fresh food products, especially vegetables. But prices of goods such as agricultural products and oil rose 3.5% after they climbed 3.2% the previous month, and there is upward pressure on prices as a result of demand.
There is also continued instability regarding prices of items such as rice, pork and mackerel, which are strongly felt by citizens, and the costs of security deposits, manufactured goods and eating out are going up as well.
Strengthening of Policy Measures
The recent instability regarding security deposits is a basic effect of the financial crisis, and the preference for the security deposit system makes it more difficult to stabilize prices. The government will closely monitor the situation of the markets and act preemptively, keeping in mind the possibility of a recurrence of instability related to security deposits and monthly rent. Security deposits, which account for a growing portion of the price index, are a core factor in the stabilization of housing prices.
In order to stabilize personal service charges such as costs for eating out, local governments and the Ministry of Public Administration and Security plan to expand their price stabilization campaigns and induce more volunteer activities by consumer groups. The government will strengthen its efforts to stabilize prices by conducting on-site inspections to check real prices, such as those for pork belly, ribs and food at franchise restaurants, as well as prices in various areas of the service industry.
As part of this effort, the Fair Trade Commission will conduct focused investigations into any suspected unfair trading activity such as price collusion, and take corrective measures if any illegal activity is found.
Press Release
MINISTRY OF STRATEGY AND FINANCE
www.mosf.go.kr
Public Utility Charges
This month, the government will announce a plan for comprehensive management of public utility charges such as by thoroughly examining them in the second half of the year while limiting increases and spreading out their timing as much as possible. Regarding key charges, it plans to take adjustment measures that reduce production costs and save energy in a way that stabilizes prices and improves the livelihood of citizens. The government also plans to thoroughly consider the financial conditions of businesses.
Furthermore, it will consider a market-friendly and creative alternative such as introduction of a time- based charging system in order to limit the amount of demand and provide more manpower.
The Ministry of Public Administration and Security plans to issue guidelines to local governments in June regarding the stable management of public utility charges in provincial areas, such as subway and service charges that can be set autonomously by those governments.
Tariff Quota System
For the stability of import prices, the government will carefully consider whether to extend the tariff quota for 46 items that is scheduled to expire at the end of June, with 108 items currently subject to the tariff quota system. The government will decide whether to extend or put a new quota for raw materials, items causing or expected to cause price instability, and items needed to expedite more competition in the market.
It will also strengthen its steps to conduct special examination of nine items seen as contributors to price instability. First, for the stability of rice prices, it will put an additional five tons of rice on the market from June 7-20, with rice produced in 2009 to be sold for 48% less than that produced in 2010.
In order to stabilize the price of mackerel, the government will assess the catch from coastal waters and consider extension of the tariff quota. It will also extend the tariff quota for egg powder in order to stabilize the prices of eggs.
