200 million eggs to be imported; special envoy to Norway for mackerel supply

Public utility rates frozen; LPG butane levy waived through year-end

Loans for small businesses doubled to 3 trillion won; hoarding penalties tightened

The government will inject 1 trillion won ($647 million) in fiscal spending to keep consumer price inflation below 3 percent in the second half of the year. It plans to hold the largest-ever discount event covering all agricultural, livestock and fishery products in July and August, while importing an additional 200 million eggs and dispatching a special envoy to Norway to secure mackerel supplies.

Electricity and gas rates will remain frozen in the second half, and the LPG butane sales levy will be waived through year-end. The government also plans to expand support for energy-vulnerable households and small businesses hurt by high fuel prices to ease the burden of food and living costs.

A shopper browses the aisles of a hypermarket in Seoul. [Yonhap]
A shopper browses the aisles of a hypermarket in Seoul. [Yonhap]

Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol announced the measures Friday at a joint meeting of the emergency economic task force, the economic ministers' meeting and the special task force on living-cost price management. The package is titled "Measures to Stabilize Living-Cost Prices and Ease the Burden on Ordinary Citizens."

The announcement comes in response to consumer price inflation climbing to 3.1 percent in May, driven by rising fuel prices and strong gains in agricultural, livestock and fishery product prices. The government said it will mobilize all available fiscal, tax and financial tools to bring second-half inflation back below 3 percent.

To that end, the government will commit about 1 trillion won to agricultural and fishery product discounts, essential living-cost relief and support for small businesses hurt by high fuel prices. Of that total, 350 billion won is earmarked for the record-scale discount event on farm and fishery products. Additional allocations include 99.7 billion won for extra egg imports, 50 billion won to secure and distribute mackerel domestically and from abroad, 36.2 billion won to expand stockpiles of agricultural and livestock products, and 32.5 billion won for additional energy voucher payments.

Starting in July, the government will for the first time extend its discount program to all categories of agricultural, livestock and fishery products — up from the previous 22 designated items. The consumer discount cap will also be raised to a maximum of 30,000 won per week.

Eggs will be discounted 20 percent across all product lines at every participating hypermarket, and the rice discount will increase from 5,000 won to 6,000 won per 20-kilogram bag. Mackerel, dried laver and other seafood that has seen sharp price increases will be sold at up to 60 percent off on a year-round basis through year-end. Traditional market agricultural vouchers — previously limited to the Lunar New Year and Chuseok holidays — will be issued monthly from July through November at 20 billion won per month, up to double the previous scale.

The government will also move to stabilize prices through supply expansion. Allocating 99.7 billion won, it will increase fresh egg imports more than sixfold to bring in an additional 200 million eggs, supplying them not only to retail stores but also to small businesses such as bakeries. The scope of egg delivery price reductions will be extended to cover all produce shipped through the National Agricultural Cooperative Federation, and hog shipment incentives will be doubled to encourage greater supply.

A special government envoy will travel to Norway from July 6 to July 17 to secure additional mackerel supplies, while 2,000 tons of Norwegian mackerel will be directly imported and sold at low prices. New import sources, including the United Kingdom and the Faroe Islands, will also be explored. For domestically caught mackerel, volumes previously destined for export will be redirected to the domestic market, with the government purchasing them directly and reselling at roughly half price. Hairtail, squid and other items with rising prices will similarly be bought directly and released at a discount.

For processed foods, companies that participate in the discount program will receive export support incentives to minimize price increases. To reduce raw material costs for food producers, the government will extend the quota tariff period for 13 product categories and add nine new ones.

Supply and demand management in preparation for abnormal weather will also be strengthened. The government will conduct regular checks on the growing and breeding conditions of key monitored items — including cabbage, radish, apples, watermelons and eggs — and will invest 36.2 billion won to expand stockpiles. An additional 4.1 billion won will go toward livestock support to reduce heat damage, and 1.8 billion won will be directed at countering high water temperatures affecting fisheries.

Measures to ease essential living costs will run in parallel. The government will freeze central public utility rates — including electricity and gas — in the second half of the year and manage local public utility rates under the same freeze policy. The quota tariff rate on LPG and LNG will be set at zero percent for the second half, and the individual consumption tax on LNG used for power generation will be temporarily reduced by 15 percent.

Fuel cost-linked subsidies for water tankers, passenger vehicles, and tax-exempt fuel for farmers and fishers will be extended through September, with a review of further extension through year-end if needed. Expressway toll discounts will be expanded for people with disabilities and national merit recipients, and new weekend and public holiday discounts will be introduced for households with two or three children.

Some 220,000 households that use kerosene or LPG and receive energy vouchers will get an additional 147,000 won, usable from October this year through May next year. The government will also pursue an expansion of the residential energy cashback program, wider distribution of balcony solar panels, and relief on electricity bills for self-employed business owners.

Support for small and medium-sized enterprises hurt by high fuel prices will be expanded as well. The "Small Business Hope Dream" loan program will be doubled from 1.5 trillion won to 3 trillion won, and customers who pay with local gift certificates at businesses registered under the "good price" program will receive additional cashback. Small and medium-sized enterprises will receive liquidity support and foreign exchange risk coverage through a Middle East situation relief program and currency fluctuation insurance.

To strengthen the effectiveness of its price stabilization measures, the government will also tighten penalties for illegal practices such as hoarding and cornering the market. It plans to amend the Price Stabilization Act to impose fines of up to twice the profits gained from violations, with a maximum penalty of up to 4 billion won in cases where profits cannot be identified or calculated.

The government will continue investigating potential price-fixing among oil refiners, gas stations, paint manufacturers and polyvinyl chloride producers — sectors linked to Middle East war-related commodity movements. For repeat offenders, authorities will consider introducing license revocation, business suspension and executive dismissal orders.


y2k@heraldcorp.com