The sharp rise in the country's minimum wage this year is fueling inflationary pressure and concerns of public charge hikes going forward that can increase the burden on ordinary people, market watchers said Sunday.
The government marked up the minimum wage for all workers by 16.4 percent in 2018 to 7,530 won ($7.04) from 6,470 in 2017 as part of a broader move by the incumbent Moon Jae-in administration to reduce the pay gap between workers and fuel private consumption that can act as a growth engine for the economy as a whole.
Observers said that while the government is keeping close tabs on prices and vowed to check sudden spikes, there are signs that businesses, burdened with higher wages, have been moving to raise prices on goods and services they are offering.
(Yonhap)
"Prices for eating out and general food costs have gone up, along with hints that transportation-related costs will be adjusted," a market analyst said.
He said, in particular, the price for eating out has been affected the most, with numbers for fast food and coffee joints all moving upward. Some businesses have also started to charge extra for food delivery.
Data showed that prices of various food, like frozen dumplings, and processed food, such as ham and fish cakes, as well as beverages, have all risen.
"The rise in the minimum wage has not only affected individual businesses, who have been forced to pass on the burden to patrons, but the distribution sector and materials prices," a local representative of restaurant business said.
He stressed businesses have to adjust prices if they do not want to take a hit in earnings.
Besides food and restaurant prices, watching a movie at the theater, particularly, on the weekends will surpass the 10,000 won mark, which can impact the pockets of consumers.
In the area of public charges, a local civic group warned there are signs that the government may be planning to hike transportation and utility prices once the regional elections are over in June.
"There is a chance that subway, taxi, tap water and sewerage costs will all go up later in the year," an official at the group said.
The government, meanwhile, said that it will redouble efforts to control prices and implement measures to keep vital prices of necessities like farm and fisheries products in check, although the overall inflation rate is not a source of concern at present.
Statistics Korea said consumer prices rose 1.3 percent in March compared with a year earlier, with gains being stable at around 1 percent levels for the past six months. On the other hand, policymakers said they are following the price gains of agricultural and fishery prices that rose 4.7 percent and eating out expenses that gained 2.5 percent. Policymakers said they can increase the supply in the event of sharp hikes.(Yonhap)