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Following President Lee Myung-bak's instructions, the government on Tuesday released a list of 52 household necessities whose prices the government will keep under tight control.
Some companies whose products are on the list complained, fearing that the controls would make it hard to properly reflect their production costs in their prices.
The government plans to announce price fluctuation rates of the listed items every month. The items are daily necessities most consumed by households in the bottom 40 percent of the income bracket.
Included on the list are instant noodles and cabbage, whose prices President Lee showed a particular interest in, and other agricultural products such as radishes, leeks and garlic, whose prices have soared recently. Private tutoring institute fees are also on the list.
Controversy flared over some items, such as soju, as to whether they are daily necessities, people's preferences, or addictive goods. Soju was finally included because it takes up a large proportion of low-income people's spending. Beer, however, was excluded.
"JJajangmyeon," a type of Chinese noodles, was included on the list, as it is also a favorite among low-income people.
Detergent, flour, baby goods and sugar were added to the list at the last moment at the request of consumer groups. Initially the Ministry of Strategy and Finance had considered not including baby goods, such as powdered milk and baby napkins, on grounds that they are consumed only by a specific age group. But they were also included.
However, the government can directly control only seven kinds of public utility fees, or 13 percent of the 52 items. The central government said it will freeze those seven public utility fees and also ask local governments to keep local utility fees under control during the first half of this year.
Besides the seven public utility fees, the government can control only a few agricultural products that it can buy from farmers and sell to the market under contract farming.
Experts predicted that the price controls will not be as helpful as the government hopes, as they may lead to a deterioration in product quality. In the long term, production and supply may be discouraged.
(englishnews@chosun.com )
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