SEOUL, KOREA --- The government held its weekly ministerial meeting on consumer prices on December 19 to examine the outlook for prices and to discuss recent trends in the supply of agricultural and livestock products as well as plans to stabilize key prices next year. Minister of Strategy and Finance Bahk Jae-wan chaired the meeting.
Statistics released last week showed that import prices and producer prices fell 1.6 percent and 0.2 percent, respectively, month-on-month in November due to the stabilization of the exchange rate and the decline in the price of industrial products. The drop in prices is expected to have a positive effect on consumer prices overall.
However, there is a possibility of instability in oil prices due to volatility in international financial markets from the eurozone crisis as well as the Iranian nuclear problem. On December 16, the exchange rate was 1,161 won per US dollar, marking a rise of 5.2 percent over the last three months.
Oil price (USD/barrel): 105.8 (Sep. 2011) , 103.5 (Oct.) _ 107.9 (Nov.) _ 102.0 (Dec .16)
Due to seasonal conditions, there is a possibility of a drop in supply of vegetables and an adjustment of service charges, as well as an increase of inflationary sentiment ahead of the Lunar New Year holiday in January.
The government will put top priority on stabilizing the lives of citizens in 2012 by stabilizing prices and continuing its policy efforts so the price stabilization can be felt by citizens.
According to the Korea Rural Economic Institute, next year’s supply of agricultural and livestock products will be stable overall with an increase in supply of vegetables as well as livestock products such as beef and chicken.
Expected increase in shipments, January 2012 (%, year-on-year): 44.7 (cabbage), 44.8 (radishes)
Expected increase in supply of livestock products, Dec 2011-Feb 2012 (%, year-on-year): 10.3 (beef), 4.8 (chicken)
However, the supply of some agricultural and livestock products such as rice, dried peppers, garlic and pork may be unstable due to expectation of higher prices as well as a decline in supply because of lower production.
As for other steps to stabilize prices, the Ministry of Public Administration and Security will cooperate with local governments to minimize increases in public service charges as much as possible and focus its policy efforts on stabilizing prices that affect citizens by spreading out and adjusting the timing of price increases.
