The Bank of Korea and the Ministry of Strategy and Finance may have to readjust their inflation forecast for the second half of this year and next year as they did for growth projections amid increasing inflationary pressure, industry sources said.

Korea is expected to see double-digit increases in public transportation, electric utility and taxi fees, according to data from the central bank, Statistics Korea and private consumer reports.

Such rising prices, on the back of increasing oil prices, could further burden low and mid-income earners and prompt them to tighten their spending. Higher inflation has been widely expected following a projected upswing in gross domestic product growth this year.

Korea’s economy recorded a 1.1 percent expansion in the second quarter of this year, driven by government spending and construction investment.

Also, many public utility and transportation operators have argued that fees are too low and need to be raised in accordance with market forces.

But political circles have been reluctant to endorse such moves for the sake of mid-income constituents.

A wage increase could offset rising consumer prices, economists said, and this could theoretically help lessen the inflation burden as the government-backed 70 percent employment roadmap may lead to a jump in personal or family income.

Average workers’ wage growth has generally been stagnant over the years in part due to low inflation triggered by the global financial crisis that led to layoffs and reduced spending.

Korea, whose inflation rate has been hovering around the low 1 percent mark for eight straight months, is expected to see consumer prices grow 2.1 percent in the second half, on the back of economic recovery led by fiscal and monetary stimulus.

But its full-year projection is 1.7 percent, according to the central bank.

The Finance Ministry’s inflation projection was also 1.7 percent this year.

By Park Hyong-ki (hkp@heraldcorp.com)