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Prices have not stabilized yet

Posted January. 25, 2023 07:51,   

Updated January. 25, 2023 07:51


Following electricity and city gas price hikes, the worries of ordinary people are growing as transportation prices fluctuate from the beginning of the year. Plans to raise subway and bus fares in Seoul, which are scheduled to increase from April this year, up to 400 won are being considered. As the demand for heating energy increases with the strongest cold spells this winter, voices of concern about the ‘heating expense bomb’ have also grown in many places. Due to the successive rises in public utility rates, the level of prices experienced by commoners is getting higher and higher.

The Seoul Metropolitan Government announced that it would hold a public hearing on subway and bus fares next month and present two proposals for an increase of 300 won and 400 won. Initially, it would pursue a plan to raise 300 won, but a 400-won increase proposal has been added. Based on subway fares, if the fare rises by 300 won and 400 won, it will lead to a 24% and 32% increase, respectively. In addition, the basic fare for medium-sized taxis in Seoul will go up by 1,000 won from next month. Other local governments are also preparing to increase traffic fares at a similar level.

It is said that most utility bills have already risen or are about to rise, so people are afraid to even look at them. The 38% increase in city gas rates over four times last year combined with the nationwide cold weather this winter has resulted in many households with heating bills increasing by as much as hundreds of thousands of won this month. The home-use electricity rates have risen 9.5 percent starting this month. Additional hikes in city gas and electricity rates are predicted after the second quarter.

Granted, it is true that public utility rate hikes are unavoidable due to skyrocketing raw material prices. However, the problem is that if public utility rates rise all at once, there is a high potential to push prices up again. In a situation where the inflation rate last year recorded the highest in 24 years, it is bound to come as a huge burden to ordinary citizens. There are many variables in terms of inflation, such as the rise in raw material prices due to China's reopening (resumption of economic activities), which can act as inflationary pressure. Nor should slowed-down inflation be a cause of complacency.

Regarding the government’s prospects, it is also true that some are concerned that the government is taking a wait-and-see attitude toward prices. Deputy Prime Minister and Minister of Strategy and Finance Choo Kyung-ho said that at the end of the first quarter, we would see inflation in the 4% range, and in the second half, we would see inflation in the 3% range. If inflation continues, it will decrease real household income, and consumption recovery will inevitably be delayed. We must continue to stay vigilant by thinking that there will be no stability in people's livelihood if we fail to rein in prices.