Vice Minister of Economy and Finance: "Measures to Prevent the Spread of Excessive Expectation Inflation Psychology"

32nd Vice Ministers' Meeting on Prices
"Emphasis on Rapid Reflection of Reduced Fuel Tax in Consumer Prices"

Lee Eok-won, Vice Minister of Strategy and Finance, presides over the 32nd Vice Ministerial Meeting on Prices held at the Government Complex in Gwanghwamun, Seoul, on the morning of the 2nd, delivering opening remarks. (Photo by Ministry of Strategy and Finance)

[Sejong=Asia Economy Reporter Moon Chaeseok] Lee Okwon, the 1st Vice Minister of the Ministry of Economy and Finance, stated on the 2nd regarding concerns about inflation (sustained price increases), "We will closely monitor domestic and international price trends and proactively continue to take necessary measures to prevent opportunistic price hikes and the spread of excessive inflation expectations."

On the morning of the same day, Lee chaired the 32nd Vice Ministerial Meeting on Prices held at the Government Seoul Office in Gwanghwamun, Seoul, saying, "Global inflationary pressures are expanding, with global energy prices continuing to rise and consumer prices in the US, China, and the Eurozone showing an upward trend."

According to Statistics Korea, last month’s consumer prices in South Korea rose 3.2% year-on-year, marking the highest increase in 9 years and 9 months. Lee diagnosed, "The effect of supporting 18.88 million people with 20,000 KRW per person for communication costs in October last year has disappeared, acting as a 0.7 percentage point upward factor. Excluding the base effect of communication cost support, the month-on-month consumer price index rose by 0.1%, showing a significant slowdown in the rate of increase."

Although the base effect of communication cost support will disappear this month, upward factors such as rising international oil prices and base effects of agricultural, livestock, fishery products, and personal services remain. Lee said, "There is ongoing concern that the rise in energy prices such as oil and supply disruptions may last longer than expected. It is time to concentrate all government-wide capabilities for a full-scale response to stabilize the prices and support the livelihoods of ordinary people."

He emphasized that the effect of the fuel tax reduction will be reflected in the market as quickly as possible. Lee stated on the 2nd, "We will extend the operating and delivery hours of low-cost oil depots to up to 24 hours, including weekends." Although a 20% fuel tax cut for six months should set the price at 164 KRW per liter (ℓ) for gasoline, they aim to minimize the time until the tax cut is actually reflected by managing the distribution of gasoline shipped before the tax cut.

Lee said, "We will use all available means, including extending depot operating hours and splitting supply volumes allocated to each gas station, to ensure that the fuel tax reduction volumes are promptly supplied to all gas stations nationwide."

He added, "In particular, through close cooperation with related organizations including refiners, we will ensure that the fuel tax reduction is reflected as soon as possible from the 12th, the implementation date of the tax cut, at refiner-operated gas stations and budget gas stations, which account for 19.2% of all gas stations. We will also encourage voluntary price reductions at privately owned gas stations through the Gas Station Association’s member companies."

Additionally, he said, "We will form a 'Public-Private Joint Market Inspection Team for Fuel Tax Reduction' led by the Ministry of Trade, Industry and Energy to monitor daily the supply prices of refiners and retail prices at gas stations nationwide. If unfair practices such as collusion occur, we will actively respond through investigations by the Fair Trade Commission. We will freeze residential gas prices until the end of the year by applying a 0% tariff rate on liquefied natural gas (LNG) and reflect the tariff reduction in commercial and power generation gas prices starting next month."

Efforts to stabilize prices will continue focusing on grocery basket items such as rice, kimchi vegetables, beef and pork, and eggs. Lee said, "We plan to manage supply and demand so that this year’s increased rice production is sufficiently reflected in prices. During the peak kimchi-making season, we will expand the supply of kimchi vegetables and promote discount events." The price of a tray of eggs (30 eggs) entered the 5,000 KRW range on the 19th of last month. They plan to monitor the normalization process of production, distribution, and sales, and improve the system by installing auction markets with Pocheon Livestock Cooperative and Yeoju Haemil next month to determine prices through auctions.

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