South Korea to raise electricity and city gas prices amid high inflation and cost of living
South Korea announced today that it will increase electricity prices by 5.3% in an effort to partly account for rising generation costs. This decision, initially slated for implementation on April 1, was postponed by over a month due to concerns about the potential impact on already high inflation rates and the cost of living. This will be the second electricity price hike this year, following a 9.5% increase implemented at the beginning of the year reports Channel News Asia.
The administration of President Yoon Suk Yeol, who recently marked his first year in office with low approval ratings, is facing a delicate balance between addressing the mounting losses of utility companies and the growing burden on households affected by rising living costs. Energy Minister Lee Chang-yang expressed his empathy for the public’s concerns during his announcement of the decision, stating that he felt “heavy-hearted about the burden and concern coming from the price increases”.
Korea Electric Power Corp (KEPCO), the state-run electricity giant, reported an operating loss of 6.2 trillion won (US$4.69 billion) for the first quarter of this year, following a staggering 32.6 trillion won loss for the entirety of last year. In addition to the electricity price hike, the ministry has also announced a 5.3% increase in city gas prices for households, with both price adjustments becoming effective on Tuesday.
Inflation in South Korea has been gradually subsiding since peaking at a near 24-year high of 6.3% in July last year, but it continues to hover around 4%, significantly above the central bank’s target of 2%. As parliamentary elections approach in approximately 11 months, a recent Gallup Korea opinion poll revealed that President Yoon’s disapproval rating sits at 59%, significantly higher than his approval rating of 35%.
