Korea rolls out measures to tame inflation, stabilize living conditions

• Published date: 30 May 2022
• Publication title: The Korea Times

The finance ministry on Monday unveiled a set of measures to curb inflation and stabilize people's living conditions, including the removal of import duties on key foodstuffs, amid concerns that mounting price pressure could hamper economic growth.Under the measures, the government plans to lift import tariffs on seven key food ingredients, such as cooking oil, pork and flour, until the end of this year.

The government will cut value-added taxes on imports of coffee and cocoa beans until 2023 in a bid to help ease their import costs. It will not impose value-added taxes on packaged processed food, including kimchi and soybean paste, until next year.

"Amid high inflation, rising interest rates and a hike in housing expenses have weighed on households' living costs," Yoon In-dae, a senior ministry official, told a press briefing Friday, ahead of the official announcement.Korea faces mounting inflationary pressure as energy and food prices soared amid the protracted war between Russia and Ukraine and global supply disruptions.

Demand-pull price pressure also rose due to the economic recovery.The finance ministry said its latest measures centered on easing upward pressure on import costs, rather than imposing price control.

It expected the removal of import duties on pork will help drive down their import prices by 20 percent.The ministry estimated the measures, if fully implemented, could lower consumer prices by 0.

1 percentage point. Tax revenue is expected to fall some 600 billion won ($477 million) due to the cut in the tariffs and taxes.

Inflation growth is widely expected to exceed 5 percent in May after a 4.8 percent on-year spike in April, the fastest rise in more than 13 years.

Last week, the Bank of Korea (BOK) sharply raised its 2022 inflation outlook to a 14-year high of 4.5 percent from its previous 3.

1 percent estimate. The central bank lowered its growth forecast for the Korean economy to 2.

7 percent from 3 percent.Along with the measures to put a lid on inflation, the government announced measures to alleviate people's living costs and ease property-related taxes to ensure housing stability.

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