Several key public fees including those for gas, electricity, railway services and postal deliveries are to face a sharp increase this year, reflecting the government’s decision to put economic growth ahead of price stabilization.
Concerns prevail, however, that the financial burden will be shouldered by low-income consumers.
The average retail price of city gas soared by 5.8 percent, starting from Wednesday, according to the Ministry of Trade, Industry and Energy and the Korea Gas Corporation.
The steep rise is attributable to the increased import price of liquefied natural gas, as well as energy shortages due to the suspended operations of several local nuclear reactors last year.
Also, in November last year, the ministry approved of the Korea Electric Power Corporation’s plan to raise the general electricity costs by 5.4 percent within this year.
Korea Post, too, said on Thursday that it will increase the delivery fees for heavy parcels by 500 won to 1,500 won from next month so that it may make up for its accumulated deficits.
“This is the first price hike since we froze the parcel rates back in 2005,” said an official.
“The measure was inevitable, considering variables such as the consumer price, labor cost and oil price.”
The state-run railroad operator KORAIL, which has been disturbed by its union strike and privatization disputes, is said to be seeking a 5 percent fare hike, though details on the rate and the timeline are yet to be confirmed.
The Ministry of Health and Welfare is also planning to boost the health insurance fee by 1.7 percent and the medical fee by 2.36 percent this year, according to officials.
To make things worse for consumers, the price of major flour and dairy products are also set to jump by a considerable margin. In the case of Orion’s popular Choco Pie, the retail price of a 12-piece box is to soar by 20 percent, from 4,000 won to 4,800 won, according to officials.
Behind this series of public fee and consumer price hikes was the financial authorities’ shift from a conservative financial policy to a growth-oriented strategy.
“We will continue financial support so that the current economic recovery trend may continue, while making sure that the consumer inflation rate remains within the target range,” the Bank of Korea said last month, upon announcing its monetary credit policy guidelines for 2014.
This came in contrast to the BOK’s statement the previous year that market price stabilization is the top priority task.
By Bae Hyun-jung