South Korea is considering cutting taxes and tariffs on oil and other products to try to curb inflation, South Korean President Lee Myung-bak said yesterday as figures showed a sharp rise in prices.
Seoul has made fighting inflation its economic priority this year and pressure rose on the government to act after data showed prices continued upwards last month because of the increasing cost of food and energy.
In a televised interview, Lee described the issue as a serious problem and said the government “is reviewing whether to reduce taxes and import tariffs on things like oil prices.”
The consumer price index rose 4.1 percent last month from a year earlier and increased 0.9 percent month-on-month, Statistics Korea said yesterday.
Those figures compared with December’s 3.5 percent year-on-year rise, 0.6 percent month-on-month.
Prices of fresh food products jumped 30.2 percent from a year earlier, while oil and energy costs rose 10.9 percent.
The central bank last month unexpectedly raised the benchmark interest rate 25 basis points to 2.75 percent in a bid to tame rising prices and also unveiled a set of other measures to keep inflation in check.
Lee stuck to its forecast of about 5 percent economic growth this year, following 6.1 percent last year.
“However, I am worried about inflation ... the government needs to work at the forefront of efforts to tame inflation,” he said, describing rising food prices as an international concern.
The government said that in addition to global trends, last month’s inflation was also fueled by a major outbreak of foot-and-mouth disease and abnormally cold weather in South Korea.
Separate figures also released yesterday showed that the export-dependent nation last month posted a healthy trade surplus for the 12th straight month, although it was well down on the previous month’s figure.
The US$2.96 billion figure compares with a surplus of just over US$4 billion in December, the South Korean Ministry of Knowledge Economy said.