South Korea Vows Steps to Stabilize Cost of Food, Necessities

South Korea will take more steps to stabilize the prices of food and other necessities after the nation’s economic recovery contributed to inflation.

The government plans to lower or scrap tariffs on some imported goods, such as wheat flour and corn, and limit increases in the cost of other items such as utilities, the Ministry of Strategy and Finance said in a statement released in Gwacheon, south of Seoul, today.

Consumer prices rose 3.3 percent in November, after decelerating from a 20-month high reached in October that breached the Bank of Korea’s ceiling of 4 percent. The monetary authority will leave the benchmark interest rate at 2.5 percent at the last policy meeting of the year on Dec. 9, according to all 10 estimates from economists in a Bloomberg News survey.

Annual inflation will probably accelerate “a little” next year from a projected 2.9 percent in 2010 due to increased consumer spending and higher oil prices, the ministry said.

The initiatives detailed today also include increasing the supply of farm and fisheries products, monitoring food prices and promoting competition among retailers, according to the statement. The ministry outlined similar measures in September.

Bank of Korea Governor Kim Choong Soo and the policy board have raised borrowing costs twice this year from a record-low 2 percent, by 0.25 percentage point in each of July and November.

To contact the reporters on this story: William Sim in Seoul at wsim2@bloomberg.net

To contact the editor responsible for this story: Chris Anstey in Tokyo at canstey@bloomberg.net

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