Basic living costs in Korea to continue to rise across the board

People wait in line to grab a taxi in front of Seoul Station in central Seoul on Sunday. The basic taxi fare in Seoul will be raised to 4,800 won ($3.9), up 1,000 won, starting Feb. 1. [YONHAP]

Shocking gas bills were only the start: Seoulites may have to tighten their belts more as a series of hikes in public utility costs are scheduled to take place within the first half of the year.

Public transportation fares, electricity rates, and even prices of garbage bags have either already risen or are slated to be increased this year.

Starting Feb. 1, the basic taxi fare in Seoul will be raised to 4,800 won ($3.9), up 1,000 won from the current price. The increase is the first in four years.

The basic distance, or the distance that needs to be traveled before the fare increases, will be decreased to 1.6 kilometers (1 mile) from the current 2 kilometers. The standard fare will then increase by 100 won per 131 meters (430 feet) traveled, a decrease from the current 132 meters.

This comes just two months after the basic fare between 11 p.m. and 2 a.m. rose by 40 percent in December.

This means a customer who would like to travel from Jonggak Station, central Seoul, to Gangnam Station, southern Seoul, a distance of roughly 10 kilometers, at midnight will have to pay 17,700 won. Before the change, the person would have only had to pay 13,700 won.

The basic fare for luxury taxis and jumbo taxis will also increase from 6,500 won to 7,000 won.

The price of public transportation rose on average 9.7 percent last year, the steepest hike since the 1998 Asian economic crisis.

The Seoul Metropolitan Government has also been pushing hard to increase the fares of public buses and subways for the first time in eight years.

It is considering two fare hike proposals — 300 won or 400 won — with the aim of applying the change as early as April. Currently, adults in Seoul pay 1,250 won for a regular subway fare and 1,200 won for a regular bus ride. With the change, the fare for the subway will rise to 1,650 won and that for buses will be 1,600 won.

The city government is also pushing to increase fares of Ttareungi, the Seoul city bike rental system, within the year.

"If the Seoul Metropolitan Government raises the fares, it is highly likely that other local governments will follow," said researcher Lim Jae-kyun from KB Securities. "The market underestimates how much a hike in public utility costs will influence consumer prices."

Electricity rates were increased by 13.1 won per kilowatt hour, or by 9.5 percent, starting Jan. 1 in the biggest jump since the oil crisis in the 1980s.

An average household with four members is expected to pay an additional 4,022 won per month.

"The Korea Electric Power Corporation and the Trade Ministry proposed an increase of 51.6 won per kilowatt hour, so the rates will inevitably be raised more within the year," Lim added.

The Seoul city government will raise water fees by 100 won to 480 won per ton starting this year. Incheon, Daejeon, Ulsan and Sejong governments are also considering hiking their fees.

The Gyeonggi, South Jeolla and Gangwon provincial governments are scheduled to raise the price of their garbage bags.

These price hikes are hitting lower income households especially hard.

Households in the first quintile of income brackets, the bottom 20 percent of the population, spent 91.3 percent of their earnings on essential living costs in the first quarter of 2021, according to data by Statistics Korea. The essential cost of living covers the basic necessities such as food, clothing and shelter.

BY SARAH CHEA [chea.sarah@joongang.co.kr]