South Korea’s finance minister promised Thursday to grant more incentives to municipal governments for their efforts to refrain from raising regional public service fees in a bid to prevent price hikes from fueling overall inflationary pressure.
“To induce price stability, the government will expand incentives to municipalities for their efforts to manage regional public fees in a stable manner,” Finance Minister Bahk Jae-wan said during an anti-inflation meeting with other policymakers.
It plans to offer 30 billion won ($26.8 million) worth of fiscal support as incentives for provincial and regional governments if they freeze or minimize public service price hikes.
It is up from 20 billion won previously set aside for the same purpose.
The move comes after the recent decision by the Seoul city government to raise its public transportation fares to make up for rising deficits from energy costs.
Bahk has expressed concerns that fare hikes for buses and subways in the capital, where more than 10 million people live, could prompt other regional governments to follow suit, possibly exerting inflationary pressure.
Despite recent moderation, South Korea is still struggling to keep prices under control in the face of rising costs of crude oil, raw material and food products.
Last year, the nation’s consumer prices jumped 4 percent from a year earlier, hitting the upper ceiling of the central bank’s 2-4 percent target band. In January, consumer prices rose 3.4 percent from a year earlier, slowing from a 4.2 percent gain in December.
