South Korean consumers are likely to suffer from price hikes amid
shrinking disposable income next year, Korea Herald reported today.
The Finance Ministry said gasoline, diesel and LPG prices will rise as the
temporary 10 percent tax cut on fuel is to expire on Dec. 31.
In addition, due to the Finance Ministry's decision to reduce the number of
import items that get customs, the tariff rate for oil imports will rise from
the current 1 percent to 2 percent in February, and to 3 percent in March.
Electricity and gas rates are also expected to go up, as electricity and gas
fees were lifted 4.5 percent and 7.5 percent, respectively in November, the
ministry said.
Moreover, a 4.2 percent tariff rate will be imposed on imported flour, which
used to be free of tariffs, it added.
The Finance Ministry and the Bank of Korea project 3 percent consumer
inflation next year while most private think tanks predict 2009 inflation to be
between 2.5 and 3.7 percent.
Meanwhile, real income is likely to shrink as the ongoing economic downturn
is forcing companies to reduce employment and cut salaries.
The South Korean government recently announced that it would cut 19,000 jobs
at 69 public firms.
The "job-sharing programs" at public firms encouraged by the government could
trigger pay cuts in many other firms.
The job-sharing program helps retain workers jobs through accepting pay cuts
among employees.
