Korea launches pan-government scheme to curb inflation

First Vice Finance Minister Kim Byung-hwan presides over an inflation-related meeting of vice ministers at Export-Import Bank of Korea in Seoul, Nov. 9. Yonhap

The government put vice ministers — of all ministries — in charge of monitoring the prices of goods that their respective ministries administer concerning supply and demand, in its full-pledged efforts to temper inflation.

Announced by the Ministry of Economy and Finance, Thursday, the new task given to vice ministers is part of a special, pan-government scheme to tackle inflation, which is on an upward trajectory again.

After falling to a 25 month-low of 2.3 percent in July, consumer prices have been moving upward again for three consecutive months – 3.4 percent in August, 3.7 percent in September and 3.8 percent in October.

The price hikes are especially steep for major grocery items, such as vegetables, meat and milk.

They marked more than a 5 percent year-on-year price increase for the first 10 months of this year.

The trend is likely to continue until the end of the year and beyond. If realized, it will be the first time in more than a decade that price increases of staples have remained above 5 percent for three years straight.

“Under the circumstances, First Vice Finance Minister Kim Byung-hwan convened an inflation-related meeting of vice ministers in Seoul,” the finance ministry said, stressing that it was the first gathering of vice ministers to exclusively discuss prices and relevant measures to stabilize people’s livelihoods.

It went on to say, “The meeting is intended to strengthen counter-inflationary policies that used to be issued by specific ministries to all others, while enhancing responses to what is happening at production sites.”

Correspondingly, each ministry launched a response team for on-site surveys of price-sensitive goods to swiftly and consistently deal with the matter.

For instance, the finance ministry dispatched its team to cabbage fields, poultry farms and other production sites of fresh food items.

The Ministry of Agriculture, Food and Rural Affairs and the Ministry of Oceans and Fisheries also sent their own response team for on-site surveys.

The Ministry of Trade, Industry and Energy formed a pan-government task force that keeps track of weekly gas prices. The team is also responsible for cracking down on possible illegal business activities in the distribution channels.

Based on each ministry’s findings, the vice ministers will discuss ways to bolster multi-ministerial cooperation in their joint meeting scheduled to be held every week.

“We’ll not loosen monitoring activities on prices until inflation is fully eased and stabilized,” First Vice Finance Minister Kim said, noting that the prices of daily necessities are on a downward trajectory but it should not be an excuse against intensifying the monitoring.

One of the items to register a fall in its price was gas. According to Korea National Oil Corp.'s Opinet website, the price of gas per liter dropped for four consecutive weeks as of last week, from 1,788.3 won to 1,775 won, then to 1,763.5 won and finally to 1745.8 won.

Meanwhile, some economists assessed that the Yoon Suk Yeol administration is similar to the former 2008-13 Lee Myung-bak government, regarding its all-out responsive measures approach against inflation.

They pointed out that the Lee government appointed senior officials of relevant ministries to oversee prices after inflation surged to 4.2 percent in December 2011 – the highest since 2000.

Asked whether such a benchmarked policy can be successful, Hanyang University economics professor Ha Joon-kyung remained skeptical.

“We no longer live in the era where the government can press down prices,” he said, arguing the producers may wait until the government loosens its counter-inflationary policy and hikes prices again.

Yang Jun-sok, a professor of economics at the Catholic University of Korea, drew a contrast between the length of inflation under the two governments, arguing that government intervention to curb prices may not be effective.

He pointed out that prices temporarily surged for months in 2011, while they have been high overall for more than a year following the expansionary fiscal policy observed in the pandemic era.