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Korea to join G20 inflation control

Finance minister calls for policy focus on price stability

Korea will participate in the Group of 20’s efforts to control sharp price hikes in key commodities that have a direct bearing on economic growth and inflation, the government said Wednesday.

The finance ministry said playing a role in the G20 arrangement could allow Seoul to work with other countries to better cope with a rise in energy, grain and other commodity prices caused by supply and demand imbalances, and competition to secure adequate reserves.

“There is a considerable need for countries to work together to control market imbalances that can lead to sharp fluctuations in prices,” the ministry said.

In the past, Seoul had to work alone to respond to developments that took place abroad and beyond the control of local policies, it said.

“In the recent G20 ministerial meeting held in Paris, there was consensus that the recent hike in commodities prices needed to be tackled in a systematic manner,” it said.

The ministers representing the world’s advanced and large emerging countries agreed to do more to raise transparency in the natural gas and crude oil markets, and expand support for the agricultural sector through the Global Agriculture and Food Security Program.

Finance Minister Yoon Jeung-hyun said the recent surge in crude oil and other raw material prices was adding to already growing inflation pressures around the world.

“We are seeing that the recent upsurge in prices of raw materials such as crude oil put additional price growth pressure globally including in our country,” he said during a weekly meeting of senior economic officials.

“A rapid rise in inflation could lead to policy tightening in many countries and in turn hurt the global economic recovery,” a ministry statement quoted him as saying at the meeting.

Crude oil prices rose to their highest levels in more than two years Tuesday as the revolt against Libyan leader Moammar Gadhafi reduced production in Africa’s third-largest oil producer and spread concerns about future supply.

The government did not provide any additional steps to cushion the imported inflation at the meeting. Early this month, the government unveiled anti-inflation measures, including a freeze on public utility fares and delaying scheduled raises.

(From news reports)