Utility, public service prices to rise, adding to inflationary pressure

SEOUL, Jan. 26 (Yonhap) -- Prices for utilities and other public services are
expected to rise in South Korea this year as suppliers move to reflect growing
costs in customer rates, government and industry sources said Tuesday.

According to finance ministry officials and utility companies, the government is
considering price hikes for electricity and gas in the second quarter of this
year.
Currently, utility services are offered by state-run companies including Korea
Electric Power Corp. and Korea Gas Corp. These companies are often forced to cap
prices despite rises in production costs to stave off inflation.
No details on the extent of the proposed hikes were available, but the move is
expected to take into account actual production costs to alleviate financial
burdens on utility companies, officials said.
Currently, electricity is being provided at just 90 percent of production cost,
and heating gas rates also need to be increased to cover expenses, they added.
Expressway and bus fares are also expected to increase, potentially driving up
inflation. Korea Express Corp. is seeking to raise expressway fares by around 10
percent following a four-year price freeze, according to officials at the
state-run company.
"The current expressway fares are set at 75 percent of costs," a company official
said. "If we do not raise them now, we might have to increase the prices sharply
later on."
Talk of bumping up utility rates comes as the government fights a potential
increase in consumer prices, an indicator it is watching closely after
implementing economic stimulus measures over the past year to avoid a protracted
slump
The government earlier predicted that consumer prices will rise around 3 percent
this year after growing 2.8 percent last year.
kokobj@yna.co.kr
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