South Korea to Use Tariff Quotas, Reserve Releases to Combat Inflation

By Kang Yoon-seung

SEOUL, June 4 (Yonhap) -- South Korea will utilize tariff-rate quotas and reserve releases to tackle lingering inflationary pressure in the aftermath of supply disruptions caused by the Middle East war, the finance ministry said Thursday.

The Ministry of Finance and Economy discussed such measures with economy-related ministries to address consumer price hikes ahead of the summer season.

Consumer prices, a key gauge of inflation, increased 3.1 percent last month from a year earlier, due mainly to higher fuel prices. It marked the fastest growth in 26 months after rising at the same pace in March 2024.

Prices of agricultural and fishery products rose 2.2 percent, led by rice and pork. The ministry noted the increase followed a decline in the supply of agricultural products due to recent high temperatures.

"The government will secure more pork and chicken through the tariff-rate quota system and expand the program in June to ease the price burden on food products," the finance ministry said in a release.

"The government will support discount promotions for agricultural and fishery products while seeking to lower supply costs for chicken and eggs," it added.

South Korea will import 20 million eggs from the United States and Thailand from June to July and release a combined 8,000 tons of popular fishery products, including pollack and mackerel, through July.

"The country will operate a special task force designated to maintain a stable supply of agricultural and fishery products over the summer season and make proactive efforts to address heat waves and heavy rains to stabilize prices," it added.

Touching on fuel prices, the government vowed to maintain flexible policies depending on developments in the geopolitical situation in the Middle East.

South Korea may lift price stabilization measures currently in place, including the cap system, should supply disruptions in the crucial Strait of Hormuz ease, it added. The government imposed the cap system on fuel prices in March.

Petroleum product prices shot up 24.2 percent on-year in May, accounting for 0.92 percentage point of the overall consumer price increase. It marked the sharpest increase since the 35.2 percent spike recorded in 2022 during the early stages of the Russian invasion of Ukraine.