A consumer pumps fuel at a gas station in Seoul, Sunday. Yonhap
The fuel price cap system helped consumer prices drop by up to 0.8 percentage points in March, a state-run economic think tank said in a report Wednesday, noting the effects of fuel tax cuts will also begin to appear this month.
Korea introduced price ceilings for gasoline, diesel and kerosene products supplied to gas stations by oil refineries on March 13 in a bid to rein in domestic fuel prices that spiked after the war between the United States and Iran broke out.
The system contributed to a decline in consumer prices last month, the Korea Development Institute (KDI) said, explaining that it assessed the impact by comparing the actual fuel prices with hypothetical prices assuming no price ceilings were in place.
In the fourth week of March, the average gasoline price here stood at 1,819 won ($1.23) per liter, diesel at 1,816 won per liter and kerosene at 1,509 won per liter.
Had there been no price caps in place, gasoline, diesel and kerosene prices would have been higher by 460 won, 916 won and 552 won per liter, respectively, according to the KDI.
The think tank said the country will begin to see the effects of expanded fuel tax cuts this month, forecasting that the measure will likely lower consumer prices by around 0.2 percentage point.
Tax cuts on fuel products, which had been 7 percent on gasoline and 10 percent on diesel, have been more than doubled to 15 percent and 25 percent each through the end of May as part of the government's efforts to ease cost burdens on consumers.
Source: Korea Times News
