Korea’s economy could face a “burden” from growing inflationary pressure, the nation’s top economic policymaker said Tuesday, stressing that the government will push to head off price instability.
“If raw material prices continue to rise, it could pose a burden on our economic recovery,” Finance Minister Yoon Jeung-hyun was quoted as saying during a meeting with other key policymakers.
“In the short term, we will head off inflation expectations, while pushing actively to stabilize the supply base for raw materials including grains in the longer term.”
Yoon added that it is necessary to step up cooperation with other nations in better coping with rising commodity prices.
“Behind the rising raw material prices lie such global factors as climate change and growth of emerging countries,” he said. “It is important to actively diversify our import channels (for raw materials), stimulate competition through market opening and seek close international cooperation.”
He said that food security and measures to ease price fluctuations for food and raw materials will be among top agenda items to be discussed during a Group of 20 meeting to be held later this week in France.
His remarks come as countries are rushing to stockpile commodities and curb grain exports in a bid to secure sufficient supply amid rising demand and prices. This raises concerns that the world might be faced with a “food crisis” similar to one that took place in 2008.
Korea especially remains vulnerable to price volatility in the international market as it depends heavily on imports of oil and other commodities for domestic needs.
Last month, the Seoul government declared an all-out “war” against inflation, pushing to stabilize prices of daily necessities on every possible front.
The government has unveiled diverse measures such as easing import duties, unloading state stockpiles and cracking down on price-rigging in the corporate sector that it fears could lead to a rise in consumer prices.
In a related move, it launched an investigation into price setting practices of oil products and telecommunication services here.
The probe gained traction especially after Yoon earlier said that there is “sufficient” room for price cuts in the two industries amid claims by consumer groups that their prices are too high compared with the international standards.
Such actions, however, prompted an outcry from the business community that the government is forcing price cuts through “arm-twisting.”
In a press release, the government rebuffed the claim, saying that it is making anti-inflation efforts within the boundary of market principles. The government noted that it is stabilizing prices by focusing on increasing supply, enhancing retail channels and clamping down on illegal price-rigging practices among companies.