Government Releases Agricultural Food Coupons Budget Amid 3.7% Inflation Increase

Government: "Uncertainties Remain Including Omicron"

As the kimchi-making season is in full swing, the prices of key ingredients such as napa cabbage and radish have soared. On the 21st of last month, consumers were seen selecting napa cabbage at a large supermarket in Seoul. Photo by Jinhyung Kang aymsdream@

[Sejong=Asia Economy Reporter Moon Chaeseok] As the consumer price inflation rate recorded 3.7% last month, a 59 billion KRW discount coupon for agricultural, livestock, and fishery products was reflected in next year's budget proposal. With the inflation rate in the 3% range continuing for two consecutive months, measures were taken to stabilize it.

On the 3rd, Lee Eokwon, the 1st Vice Minister of the Ministry of Economy and Finance, presided over the '34th Vice Ministers' Meeting on Prices' and stated, "Considering the difficult price conditions, the agricultural, livestock, and fishery product discount coupons, which were not included in the original government budget proposal, will be reflected at the National Assembly stage." The government cited the rise in international oil prices leading to higher petroleum product prices, the reflection of increased raw material costs causing rises in dining-out and processed food prices, and the strong prices of vegetables due to cold waves and pests as factors behind last month's consumer price increase.

Additionally, the government plans to increase tariff quota support for raw materials with rapidly rising prices such as corn for processing and sugar. The budget for feed raw material purchase funds will also increase to 64.7 billion KRW next year, and as part of support for the dining-out industry, the application period for the special exemption on the input tax credit rate and limit for duty-free agricultural products will be extended for two years until 2023.

The possibility of continued inflationary pressure cannot be ruled out for the time being. He assessed, "This month's consumer prices will be influenced downward by the effect of the fuel tax reduction. However, uncertainty factors such as global supply chain disruptions, increased volatility in international raw material prices, and the emergence of the Omicron virus still remain." Accordingly, the government plans to encourage independent gas stations to promptly reflect the fuel tax reduction in their prices. Furthermore, to allow more budget gas stations, which offer relatively cheaper fuel, to open in urban areas, the minimum distance requirements between some urban budget gas stations will be relaxed.

Moreover, the government has decided to introduce a price responsibility system by sector within each relevant ministry. Each ministry will prepare a comprehensive price stabilization plan, including monitoring results of prices and supply and demand in their respective sectors, and regularly review and implement these plans through meetings. Vice Minister Lee said, "Price stabilization is a fundamental task for stabilizing the economy of ordinary citizens, so we will maintain heightened vigilance. We will closely monitor domestic and international price trends and proactively and decisively implement necessary measures to prevent the spread of excessive inflation expectations."

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