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Gov't puts off raising duty-free cigarette prices

The government has postponed its plan to raise prices of duty-free cigarettes amid a rise in demand from Chinese tourists, an official source said Thursday.

A finance ministry insider, who declined to be identified, said policymakers have decided there is little to be gained from raising prices on duty-free cigarettes at this juncture. Raising prices will hurt the price competitiveness of locally made cigarettes, vis-a-vis those sold in China.

He, however, said the government will keep close tabs on any price hikes that may be pushed forward by Beijing.

"If prices go up in China, the entire matter can be reviewed again," the source said.

The government considered making adjustments after the price for local cigarettes was marked up by 2,000 won ($1.8) per pack starting this year. This caused the average price for a ten-pack carton of cigarettes to reach 45,000 won, which is roughly 60 percent more expensive than prices at duty-free stores in the country.

Officials said in the past that the price for a carton of cigarettes could be marked up by 9,000 won, with some of the extra profit being used to replenish state-run funds

The move to hold off on raising prices also comes as local cigarette producers like KT&G Corp. have expanded their presence in the duty-free market. (Yonhap)