Home > Opinion > Editorials

Be wary of the politicization of prices

Published: 25 Mar. 2024, 19:42

The U.S. Federal Reserve has held back dialing back from its restrictive policy of setting the interest rate at a 22-year high upon the uptick in inflation, projecting a “sometimes bumpy road towards 2 percent.” Bank of Korea Governor Rhee Chang-yong last month also predicted a bumpy path in inflation as it heads downward. “Bumpy” cannot fully describe the horrendous price levels in everyday lives these days. Prices directly affect livelihood. It is why price stability becomes a top policy priority for the government and central bank. But it is not suitable or possible for the government to control prices of individual products.

Prices also affect policies. Politicians cannot neglect public angst over grocery inflation. But politicizing price always stokes side effects as it can generate meddlesome policies or misuse of valuable tax money.

The government and the governing People Power Party (PPP) decided to spend an extra 150 billion won ($111 million) on top of the original budget of 43.4 billion won to help stabilize agriculture, livestock and fisheries prices. President Yoon Suk Yeol was able to hold up a bundle of green onion selling at 875 won at a grocery chain operated by a state-invested agriculture cooperative, all thanks to the government subsidy. Instead of crediting the government policy, Yoon’s mention of the price being “reasonable” has caused controversy and made green onion a popular sarcastic tool for opposition Democratic Party members on their campaigns for the April 10 parliamentary elections.

Instead of directly subsidizing food commodities, the money can be spent to hand out food coupons for the needy.

Smart consumption is a strategy to survive the high inflationary period. When kimchi cabbage was in short supply in 2010 due to a poor harvest, then-president Lee Myung-bak caused a controversy by advising families to make kimchi with cabbage instead of the napa cabbage Koreans use, even though regular cabbage was as expensive as the napa cabbage. Still, the idea of turning to a cheaper replacement during high inflation period is smart consumption.

The government should come up with long-term measures to improve the production and distribution of farm goods in the face of supply shortage against climate changes and aging population instead of resorting to makeshift actions.

The government must find a reasonable solution by balancing the interest of farmers and consumers. There are too many cases in which the broader population is being harmed for the benefit of a small interest group.