Gov’t moves to quell fears amid rising consumer prices

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Gov’t moves to quell fears amid rising consumer prices

The government will step up efforts to keep inflation under control by stemming unjustified price hikes in food and other daily necessities, the country’s top economic policy maker said yesterday.

Finance Minister Bahk Jae-wan also underlined the pan-governmental cooperation to achieve the objective, saying that price instability could add strain to the lives of ordinary people.

“Consumer price growth remained in the lower 2 percent range last year but hikes in prices of public services and processed foods earlier this year and rising produce costs are hurting the livelihoods of ordinary people,” Bahk told a price stabilization meeting.

“[We] will strictly respond to unjustified and bandwagon moves to raise prices through the government’s antitrust watchdog and tax agencies,” he added.

For 2012, the country’s consumer prices rose 2.2 percent from a year earlier, which remained between the central bank’s 2-4 percent inflation target band set for 2010-12. Its annual core inflation gained 1.6 percent.

But anxiety remains as inflationary pressure might be going up due to recent back-to-back moves by the public sector and processed food makers to raise service and product prices.
A possible spike in demand in the weeks leading up to the Lunar New Year holiday next month could also prompt price instability.

In a related move, the government said that it will review price movements of 35 foodstuffs and personal services every day and expand supplies of some of its stockpiles including rice to meet the growing demand.

Separately, Korea’s top central banker said yesterday that the country should brace for the possibility that major central banks may end their march toward credit easing.

“It does not seem that the financial crisis will further worsen. There is a chance that major central banks may unwind their drives for quantitative easing,” Bank of Korea Governor Kim Choong-soo said in a monthly meeting with local bank heads.

Major central banks, including the U.S. and Japan, have launched a massive bond-buying program to prop up their fragile economies. Cheap money is flowing into high-yield assets in Asia, making their currencies stronger.

But some members of the Federal Reserve’s rate-setting body said it would probably be appropriate to slow or stop bond purchases well before the end of 2013, according to the minutes from the Fed’s December policy meeting. The minutes surprised the market as talks about a possible end to the program made investors jittery. Yonhap
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