After the Soaring Rise in Table Food Prices, Will Electricity Bills Also Increase?

In January this year, food price inflation ranked 4th among OECD member countries
Domestic gasoline prices rise for 15 consecutive weeks
Fuel surcharges on airline tickets reimposed due to rising oil prices
Some wholesale rates for commercial city gas also increased
Electricity rates likely to rise in the second half of the year

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[Sejong=Asia Economy Reporter Joo Sang-don] Korea's dining table prices are rising sharply as agricultural, livestock, and fishery product prices surge due to the overlapping impact of the avian influenza (AI) outbreak and holiday demand. According to the Organisation for Economic Co-operation and Development (OECD) and Statistics Korea, in January, Korea's food and non-alcoholic beverage (food) prices rose 6.5% compared to a year earlier. This is more than double the OECD average of 3.1%. In addition, domestic gasoline prices continue to rise due to increasing international oil prices, putting upward pressure on energy prices such as electricity and city gas rates.

According to the Korea National Oil Corporation on the 10th, the retail gasoline price at gas stations in the first week of this month rose by 9.7 won per liter from the previous week to 1,483.0 won, marking the 15th consecutive week of increase. Although the price of Dubai crude oil, the benchmark for crude oil imported into Korea, has recently shown a slight decline, it has risen more than 30% compared to the beginning of the year.

Liquefied petroleum gas (LPG) prices have also been on the rise since mid-last year. Domestic LPG importers E1 and SK Gas raised the domestic LPG supply price by 88 won per kilogram this month.

Fuel surcharges imposed on airline tickets are also rising along with oil prices. Domestic fuel surcharges are applied when the average price of Singapore jet fuel exceeds 120 cents per gallon. Thanks to low oil prices, surcharges had not been applied since May last year but were reimposed in February this year after nine months. The domestic fuel surcharge for February to March this year was at level 1, with a one-way surcharge of 1,100 won, and in April, it will increase to level 2, with a one-way surcharge of 2,200 won.

International fuel surcharges, which are applied in stages when the average price per gallon exceeds 150 cents, are also expected to be imposed next month. This is because the average jet fuel price from February 16 to March 15 this year is likely to exceed 150 cents. International fuel surcharges had not been applied for one year and one month from April last year until this month.

Wholesale rates for commercial city gas (for business heating, cooling and heating air conditioning, industrial use, transportation) and city gas for power generation (for combined heat and power, fuel cells, etc.) increased by 1.0545 won per megajoule (MJ) compared to February rates, reflecting the raw material cost linkage system. This is due to a temporary rise in liquefied natural gas (LNG) prices caused by a surge in LNG consumption, the fuel for city gas, during the record cold wave last winter.

The possibility of electricity rate hikes has also increased. This is because the electricity fuel cost linkage system, which reflects changes in fuel costs such as LNG, coal, and oil every three months, has been implemented since this year. The difference between the 'standard fuel cost,' which is the average fuel cost over the previous year, and the 'actual fuel cost,' which is the average fuel cost over the previous three months, is reflected in the rates. If the actual fuel cost is higher than the standard fuel cost, electricity rates will increase. Due to rising international oil prices, the actual fuel cost has increased, and electricity rates are expected to rise in the second half of the year.

This content was produced with the assistance of AI translation services.