The government jacked up prices of coal briquettes sharply Tuesday in an effort to meet rising production costs, the commerce ministry said.

Under new government guidelines on coal briquette and anthracite prices, the maximum sale price rose 19.6 percent to 534.3 won ($0.49) per coal briquette.

Demand for coal briquettes tends to increase for the winter as many low-income people use them both for cooking and heating traditional Korean homes.

The ministry also marked up the maximum sale price of anthracite by 8 percent to 172,660 won per ton.

Last year, the government raised the prices of coal briquettes and anthracite by the same rates. The price of anthracite was hiked for the first time in five years, and that of coal briquettes in seven years.

"Coal production costs have been on the rise due to worsening production environments, but their sale prices have been frozen, leading to a big gap between them," the ministry said. "Through the price hike, the government will cut subsidies for producers, while augmenting fiscal support for coal briquette users."

Under a plan for the abolition of fossil fuel subsidies submitted to the Group of 20, South Korea should put the lid on government subsidies for coal producers by 2020.

As of this year, the maximum sale price of anthracite amounts to 79 percent of the production cost, while the number stands at 64 percent for coal briquettes. The government gives producers subsidies equal to the gap.

The ministry said the government will also increase financial support for low-income people by more than 33 percent in order to cushion the impact of the price hike. (Yonhap)