Deputy Prime Minister and Minister of Economy and Finance Koo Yoon-chul announced Wednesday that the government will unveil the "third oil price cap" at 7 p.m. today, with the new ceiling taking effect starting Thursday, amid continued uncertainty stemming from the Middle East.
Koo also said the government will activate an "all-out response system" to simultaneously manage items showing signs of crisis such as essential medical supplies, as well as key household expenses including telecommunications and private education costs.
"External uncertainties remain high," Koo said while chairing the sixth meeting of the Special Task Force on Consumer Price Management. "We will focus our policy capacity on stabilizing the macroeconomy while reducing the burden on households."
The deputy prime minister also pointed to stabilizing signals in financial and foreign exchange markets. He explained that volatility has somewhat eased as the Middle East conflict entered a temporary ceasefire, while foreign capital inflows driven by expectations of Korea's inclusion in the World Government Bond Index (WGBI) have led to continued net purchases of government bonds and growth in investment accounts. He also highlighted external soundness, noting that February's current account surplus reached a record high of $23.2 billion.
However, the government decided not to let its guard down and will focus on managing consumer prices. Regarding oil price responses, the government will designate the "third oil price cap" to take effect from Thursday and announce it at 7 p.m. today.
"Thanks to the active cooperation of refiners and gas stations, the price cap system has faithfully served as a safety net that eases fuel cost burdens and defends against sharp increases in logistics costs," Koo said. "The third price cap, which will take effect from midnight on the 10th, will be announced after consultations with relevant ministries, taking into comprehensive consideration international oil price trends and the burden on citizens."
The government will also strengthen item-specific responses to prepare for supply shocks originating from the Middle East. "We will do our best to stabilize prices and supply of key items through priority supply of raw materials for essential medical products, construction material supply adjustments, and discount support of up to 50% for agricultural, livestock, and fishery products," Koo said.
The government also announced countermeasures for the PC and laptop market, where price increases have been notable recently. As product prices rise due to the impact of global semiconductor price increases, the government will strengthen inspections of distribution practices and pursue providing obsolete PCs from public institutions free of charge to vulnerable groups. It also plans to expand the PC and laptop purchase support program for low-income students using local education finance grants secured through the supplementary budget.
System reforms to ease telecommunications cost burdens will also proceed in parallel. The government will expand the "data safety option" that allows low-speed usage even after data is exhausted, and improve the system so that elderly users automatically receive benefits such as unlimited voice calls and text messages. The government expects these measures will result in telecommunications cost savings of more than 380 billion won annually.
Management of private education costs will also be strengthened. Following special inspections that detected more than 3,000 cases of irregular fee increases by private academies, the government plans to raise the level of sanctions through revisions to the Academy Act, including introducing penalty surcharges for recovering unjust profits and expanding reporting rewards.
"While stabilizing trends are appearing in the market, uncertainties remain," Koo said. "We will do our best to lower consumer prices felt by citizens through improvements to distribution structures and establishing fair market order."