Gov't tries to talk tough on inflation

Economy

Published: 10 Feb. 2022, 14:40 Updated: 11 Feb. 2022, 13:16

Gov't tries to talk tough on inflation

Shoppers buying grocery at a store in Seoul on Monday. The government announced increase in monitoring against price fixing amid increasing inflation pressure. [YONHAP]

Finance Minister Hong Nam-ki said the government will keep an eye on rising prices.

During a government meeting on Thursday, Hong stressed that it will come down hard on illegal practices such as collusion or raising prices excessively, with particular focus on processed foods and restaurant prices.

“Government departments including the Fair Trade Commission will significantly increase their market monitoring within this month,” Hong said.

Hong said inflationary pressure caused by international crude prices is having its effect in Korea.

“Stabilizing consumer prices and managing economic risks are the most important goals within the first quarter,” Hong said.

When the January consumer price report was released, Hong said there were little the government could do.

Consumer prices jumped more than 2 percent in the second quarter of last year and more than 3 percent for the last four months.

McDonald’s was the latest fast food chain to announce price increases.

McDonald’s on Thursday said the price of 30 items would be raised an average 2.8 percent, citing increases in raw material prices and logistic costs.

While the prices of Big Macs and McSpicy Shanghai Burgers will remain the same, Bulgogi Burgers will be raised from 2,200 won ($1.8) to 2,300 won.

Set menus including for the Bulgogi Burger and Quarter Pounder with Cheese as well as McChicken Mozzarella will be raised between 200 and 300 won.

Other major fast food chains have already increased prices.

Lotteria increased the price of its products an average 4.1 percent in December. Burger King raised its an average 2.9 percent last month.

The price of soju is going up.

The Korea Ethanol Supplies Company, which brings together 10 Korean ethanol manufacturers, earlier this month increased the prices of ethanol used in soju an average 7,8 percent.

Ice cream manufacturers announced that next month they are raising prices citing increases in raw material prices including for wrappers.

On Tuesday, Coffee Bean Korea start selling small size Americano coffees for 4,900 won, a hike of 100 won. Café lattes and cappuccinos are selling for 5,400 won, also up 100 won.

It was the first increase for the coffee chain in four years.

Starbucks raised its prices last month for the first time in nearly eight years.

Utility bills are expected to rise after March.

There is growing doubt over whether the government will be able to keep increases in consumer prices at its target of 2.2 percent. Last year consumer price grew 2.5 percent, the highest since 2011.

The Bank of Korea last month raised its outlook for this year’s consumer price rise from 2 percent to 2.5 percent.

Seoul National University economics professor Chang Yong-sung raised the possibility of stagflation caused by rising consumer price.

In a report released Thursday, the SNU professor noted that consumer price hikes between 2 and 3 percent seems relatively mild compared to other countries, the actual pressure people feel is quite heavy.

Chang raised concerns about the government’s supplementary budget, which is currently being negotiated by lawmakers, saying it will increase inflationary pressure.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]