South Korea announced on Monday that it will raise electricity prices by 5.3% to reflect increased generation costs. The increase had been postponed for more than a month due to concerns about how it would affect the country’s already high inflation and cost of living.
It is the second price increase for electricity this year, following a 9.5% increase at the start of the year. Following public outcry over rising living costs, the scheduled price increase from April 1 was postponed.
President Yoon Suk Yeol, who just completed his first year in office amid low approval ratings, is under pressure from utilities facing mounting losses and households struggling to keep up with rising living costs.
Energy Minister Lee Chang-yang began his announcement of the decision by saying he was “heavy-hearted about the burden and concern coming from the price increases,” a phrase that reflects the government’s political burden.
Korea Electric Power Corp (KEPCO), the state-run electricity powerhouse, experienced a first-quarter operating loss of 6.2 trillion won ($4.69 billion) after losing a massive 32.6 trillion won over the course of the year.
The government also announced a 5.3% increase in residential gas prices. Both increases will take effect on Tuesday.
Inflation in South Korea has been gradually declining since reaching a near 24-year high of 6.3% in July of last year. However, it is still hovering around 4%, well above the 2% target set by the central bank.
With parliamentary elections still 11 months away, Gallup Korea’s most recent poll, conducted last Friday, shows President Yoon’s disapproval rating at 59%, far exceeding his approval rating of 35%.
