Government Appeals Again for "Price Increase Restraint" Amid Renewed Concerns Over Inflation Instability

The producer price index, considered a leading indicator of consumer prices, has shown an upward trend for three consecutive months, raising concerns about a renewed expansion in inflation. In response, the government has requested the dining industry to "refrain from raising prices for the time being" to stabilize prices.

On the 21st, the Bank of Korea announced that the producer price index for March was 120.58 (2015 level 100), 0.1% higher than February's 120.46. This marks a continuous rise for three months following increases of 0.4% in January and 0.2% in February.

The producer price index reflects prices of raw materials, intermediate goods, and product shipment prices, and is used as a leading economic indicator related to manufacturing activity.

By category, services fell by 0.3% in transportation, but rose 0.1%, mainly in restaurants and lodging (0.7%). Among detailed items, prices increased for pork (8.8%), chicken (8.5%), xylene (2.8%), ethylene (7.3%), Korean food (0.6%), and hamburger and pizza specialty stores (3.2%).

On the same day, the government held a price stabilization meeting with major dining franchise companies, including coffee, hamburger, and chicken chains. A Ministry of Agriculture, Food and Rural Affairs official explained, "Although the dining price inflation rate has been on a continuous downward trend since peaking at 9% last September, it still exceeds the overall consumer price inflation rate. This meeting was organized to explore additional stabilization measures."

The government has been promoting measures to ease the management burden on the dining industry, such as extending the application of quota tariffs on major food raw materials and raising the limit on input tax credit deductions. Since January this year, the scope of permitted employment has been expanded to the entire dining industry, and from next month, employment of kitchen assistants in restaurants will be expanded nationwide from specialized areas, continuing efforts to alleviate labor shortages in the dining industry through improvements in foreign workforce regulations.

A Ministry of Agriculture, Food and Rural Affairs official said, "Although these are difficult times for everyone, we ask the dining franchise industry and related associations to cooperate as much as possible to stabilize food prices by refraining from price increases for the time being. The government will also make every effort to discover and review management support tasks through continuous communication with the industry to reduce their management burden."

(Photo) [Image source=Yonhap News]