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Gov’t ponders fuel tax cut extension amid soaring oil prices

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Vegetables are displayed at a traditional mart in Daejeon on Aug. 23 [JOONGANG PHOTO]
Vegetables are displayed at a traditional mart in Daejeon on Aug. 23 [JOONGANG PHOTO]

The government will review the extension of a tax cut on fuel consumption, set to expire in October, as global oil prices grow to their highest level since November 2022.

Its extension was one of the measures announced by the Ministry of Economy and Finance on Friday to tame inflation ahead of the upcoming Chuseok harvest holidays.

“The government will strengthen efforts to stabilize the oil prices,” said the ministry in a statement, adding it will review the extension “in line with the movement of the future global oil prices.”

The government will oversee some 500 gas stations nationwide for the next two weeks to make sure the tax cut on fuel consumption is reflected in its retail price.

The West Texas Intermediate crude oil futures surpassed $90 a barrel in September for the first time since November 2022, driven by expectations of tighter supply and a prolonged Ukraine-Russia war, said the ministry.

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The government has been providing tax cuts for auto fuels, including diesel and gasoline since November 2021 to help curb inflationary pressure triggered by a rise in oil prices.

The government is also financing some 67 billion won ($51 million) to prevent the prices of agricultural and fishery products from spiking and to supply a record 160,000 tons of key products commonly used during the Chuseok harvest holidays to ensure that their prices are at least five percent lower than they were last year, the ministry added.

The government also increased the affordable Chuseok gift sets, it said.

“Apart from groceries and energy that have high price volatility, stable movement is seen in the core inflation,” the ministry said in a statement. “Prices are expected to once again stabilize after October passes. But we have to stay vigilant due to uncertainties, including a rise in global oil prices.”

Korea’s consumer prices in August accelerated to 3.4 percent from a year earlier after staying in the 2 percent range in June and July. Core consumer prices, which exclude volatile food and energy prices, rose 3.3 percent on an annual basis, remaining unchanged from a month earlier.

BY JIN MIN-JI [jin.minji@joongang.co.kr]