Korean households face 31% surge in electricity, gas prices in Q1

2023.05.22 10:55:01 | 2023.05.22 12:19:37

Gas meters installed in a residential area [Photo by Lee Seung-hwan]이미지 확대

Gas meters installed in a residential area [Photo by Lee Seung-hwan]

Electricity and gas prices for households in South Korea have increased by more than 30 percent in the first quarter of this year from a year ago, with low-income households seeing a sharp surge in fuel cost spending.

According to data from Statistics Korea on Monday, the price index for electricity, gas, and other fuels stood at 135.49 in the January-March period, up 30.5 percent from the same period a year ago. It is the steepest growth since 41.2 percent in the Asian financial crisis-hit year of 1998.

The index for electricity, gas, and other fuel prices with 2020 as the base year is calculated by breaking down the consumer price index according to the purpose of expenses. It indicates the trends of prices of fuel used mostly by the households such as electricity, city gas, and kerosene.

The index for electricity stood at 136.48 in the first quarter, up 29.5 percent from the same period last year, the highest growth since Statistics Korea began to compile related data in 1975.

The index for city gas that is mainly used for winter heating and cooking rose 36.2 percent to 129. Kerosene prices also rose 23.6 percent to 171.14.

Industry insiders note that the public utility hikes following the rise in international energy prices last year have started to be reflected in the prices.

Electricity rates were raised by 19.3 won ($0.015) per kilowatt hour three times last year in April, July, and October, and again by 13.1 won in January this year. City gas rates also increased 5.47 won per megajoule four times last year.

Electricity meters installed in a residential area [Photo by Park Hyung-ki]이미지 확대

Electricity meters installed in a residential area [Photo by Park Hyung-ki]

The government raised electricity and gas prices again last week to make up for the operating losses and snowballing debt at Korea Electric Power Corp. (KEPCO) and Korea Gas Corp. The prices are expected to continue to rise sharply after the second quarter as the impact of cumulative hikes is reflected.

The rise in electricity and gas rates are weighing particularly on the low-income households.

The first quintile group of households in the bottom 20 percent income bracket spent an average of 70,006 won ($52.98) on fuel cost in the fourth quarter last year, up 20.7 percent from a year ago. The fuel expenses of the second quintile were 74,634 won, up 22 percent.

The average fuel cost of households in the fifth quintile, or the top 20 percent income group, increased 11.5 percent during the same period. The fuel cost of households in the third and fourth quintiles, or the middle class, was up 16.0 percent and 15.3 percent, respectively. The overall increase was 16.4 percent on average.

Fuel cost refers to the expenses for lighting, heating and cooling, and cooking. They include costs of electricity, city gas, liquefied petroleum gas (LPG), kerosene, and briquettes.

Concerns rise that energy price hike may lead to skyrocketing air conditioning cost for the vulnerable income group as this year‘s summer is expected to be hotter than usual.

The government has decided to defer the application of the electricity hike for the vulnerable groups for one year. It will also provide more energy vouchers and welfare discounts.

By Pulse

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