The government plans to step up its price monitoring of 22 food items and public services as part of its ongoing efforts to keep inflation under control ahead of the upcoming Lunar New Year holiday, the finance ministry said Tuesday.
The government will also provide around 21 trillion won ($18.65 billion) worth of loans and guarantees for small and medium-sized companies in a bid to help support financially vulnerable companies, according to the Ministry of Strategy and Finance.
Those measures were approved by the Cabinet meeting held earlier in the day. They were unveiled ahead of the government’s plan to announce more sweeping anti-inflation measures on Thursday, which reportedly could include freezes on college tuition and other key public services fees.
Subject to the stepped-up price monitoring are 16 agriculture, livestock and fishery products, including radishes, garlic, apples, pork, beef, chickens and eggs. Six service fees such as those for bathhouses and saunas are also included in the watch list.
In order to stabilize food prices, the government would expand supplies of 16 agricultural and fishery products including radishes, napa cabbages, apples, eggs and mackerel by 1.7 times between Jan. 12 and Feb. 1, the Ministry of Strategy and Finance said in a statement.
“The measure is aimed at keeping prices stable, as demand is increasing for those products ahead of the New Year holiday, and is also aimed at taming expectations of price volatility,” said Lee Yong-jae, a finance ministry director in charge of the price measure.
Food prices make up about 15 percent of Korea’s consumer price index and tend to accelerate inflation expectations because the country relies on corn, soybean and wheat imports to meet most of its demand.
Producer inflation hit a two-year high in December, led by food and energy prices and added to evidence of rising consumer inflationary pressure around the region.
Last week, the United Nations Food and Agriculture Organization reported that global food prices were at a record high, raising concern about a possible repeat of the 2008 food crisis.
Korea is planning to establish its own grain trading company in Chicago in the first half of 2011 as it seeks to mitigate the impact of global food price volatility.
The move, led by the state-run Korea Agro-Fisheries Trade Corp. (aT) in consortium with CJ CheilJedang Corp., Samsung C&T, STX Corp. and Hanjin Transportation Co. will be included in the set of anti-inflation measures due on Jan. 13.
The Fair Trade Commission has also launched a large-scale investigation into price rigging and inflation-causing activities, joining a pan-governmental drive to stabilize prices ahead of the upcoming Lunar New Year holiday, government sources said Tuesday.
The move by the FTC comes on the heels of its recent reorganization aimed mostly at creating a comprehensive price monitoring task force by combining its market monitoring, cartel investigation and consumer policy divisions.
The newly-created team will carry out the investigation, and its preliminary probe will be completed before the holiday that falls on Feb. 2-4, the sources said.
“As price stability has emerged as a national issue, the FTC launched a large-scale investigation yesterday in order to actively cope with inappropriate price hikes and other price-rigging activities ahead of the holiday,” a source close to the matter told Yonhap.
“This probe will be the largest ever since the FTC was established. The number of items and companies subject to the investigation will also be the largest ever,” he added.
The FTC did not specify which items and companies will be investigated, but an FTC official said the 22 items announced by the government will also be under its scrutiny.
The watchdog said its probe will focus mostly on such items for the time being as their demand will likely spike ahead of the holiday, but it will maintain its stepped-up monitoring on other products to crack down on irregular price increases and price collusion activities.