Soju makes government list of necessities

In its efforts to help low-income households win the battle against inflation, the government yesterday released its list of 52 items for which it will monitor prices.
The listed items include necessities like rice, wheat flour, electricity fees and bus fare. Soju made the list, but beer did not.
The government will pay special attention to products for which there are a limited number of suppliers, such as gasoline, and for products that have limited distribution channels, such as fresh produce, the Ministry of Strategy and Finance said.
Experts said while the measure might be well intentioned, it would be effective only in the short term. The companies producing the items on the list said the monitoring was a retreat from free-market principles.
The ministry revealed the items during a cabinet meeting presided over by President Lee Myung-bak and said it would check price movements every 10 days.
“We will not directly regulate prices,” said Yim Jong-yong, the ministry’s economic policy director. “Rather, we will help stabilize prices by cutting import tariffs, improving distribution channels and promoting competition.”
Although the government tried to calm fears it would forcefully control prices, companies were busy trying to figure out how to react to the news.
“We understand the government’s stance, but prices should be decided by the market,” said Choi Nam-seok, an official at Samyang Foods Company. “Raw material prices have doubled. How are manufacturers supposed to deal with that without raising prices? Almost everything has become more expensive including oil and packaging materials.”
There are also questions about the measure’s efficacy. “Prices are rising because of external factors. The government might be effective in the short term, but not for long,” said Chang Jae-chul, a researcher at the Samsung Economic Research Institute.
Ministry spokesman Kim Kyu-ok said if prices rise despite government measures, it will expand supply or crack down on hoarding and price fixing.
President Lee said last week that the government should create the list in a bid to fight inflation. The selection criteria were to choose items most often used by those in the lower 40th percentile in terms of income.

By Limb Jae-un Staff Reporter [jbiz91@joongang.co.kr]