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S. Korea Weighing Anti-Inflation Measures |
| Source: |
koreaherald.com |
| Source Date: |
Wednesday, January 05, 2011 |
| Focus: |
Electronic and Mobile Government, Citizen Engagement, Internet Governance
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| Country: |
Korea (Republic of) |
| Created: |
Jan 11, 2011 |
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Officials consider freezes on college tuition, public service fees
Korea will redouble efforts to keep prices in check in an effort to prevent inflationary pressure from building up and help the livelihoods of low-income and everyday people, officials said Wednesday.
Freezes on college tuition and other public service fees are among measures being discussed as part of the government drive to stabilize prices, according to the officials.
The measures were reportedly discussed during a meeting participated in by senior officials of economy-related ministries earlier in the day and presided over by Vice Finance Minister Yim Jong-yong.
The meeting comes before the government is to announce price-stabilization measures on Jan. 13 amid growing concerns over price increases ahead of the Lunar New Year holiday in early February.
“Today’s meeting is not intended to finalize measures but to have a chance to exchange ideas with each other,” a high-ranking finance ministry official said on condition of anonymity.
He said that they discussed a range of ways to stem price increases. Freezes on college tuition and minimizing rises in public utility costs such as electricity, transportation and mailing were on the table during the meeting.
The move is in line with the government’s earlier pledge to push to stabilize prices as one of its top priorities in carrying out economic policies this year along with job creation and a sustainable economic recovery.
On Tuesday President Lee Myung-bak urged his cabinet to take a “war on prices” attitude in containing inflation and central bank members expressed their concerns that consumer prices would keep heading higher.
Lee told the cabinet to make it a priority in economic policy to contain consumer inflation at around 3 percent this year, a tough task given the sustained economic recovery, heavy fund inflows from abroad and rising prices of key raw materials such as oil.
“I want (the cabinet members) to make efforts to suppress consumer price growth, taking a ‘war on prices’ attitude,” a statement from the Blue House quoted Lee as saying during this year’s first cabinet meeting.
The central bank has forecast inflation this year would pick up to 3.5 percent from 2.9 percent last year, even as it sees economic growth slowing to 4.5 percent from 6.1 percent. The government aims for 5 percent economic growth.
South Korea has traditionally enjoyed relatively stable inflation, with the annual rate ranging largely between 2 percent and 5 percent, but its energy-intensive economy is heavily exposed to global oil and fuel prices.
Data released over the past several days showed inflation was likely to accelerate as robust exports and domestic retail sales keep Asia’s fourth-largest economy on a sustained growth track.
The central bank, which aims to keep inflation at between 2 and 4 percent on average for the 2010-2012 period, raised interest rates twice last year and is widely expected to deliver more increases from as early as February.
A document released Tuesday showed most of the Bank of Korea’s board members expressed their concern in November that inflation, although still far from threatening and led by fresh food prices, could spiral out of control if left unchecked.
“If not for appropriate policy measures, the rising inflation expectations are feared to accelerate inflation by stoking wages and overall consumer goods prices,” the document quoted one member as saying during the Nov. 16 meeting.
At that meeting, the Bank of Korea raised the policy interest rate by 25 basis points to 2.5 percent in its second rate hike since the end of the global financial crisis and following a similar 25-point increase in July.
It held the 7-day repurchase agreement rate steady at its December meeting, but one of the Bank of Korea’s six board members told Reuters on Tuesday that building inflationary pressures in China posed an additional, serious threat.
The Bank of Korea next reviews the rates on Jan. 13.
China is South Korea’s largest source of imports and rising costs there would likely be passed through in higher prices for consumer goods, eventually pushing up overall prices in China’s smaller neighbor.
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