Fuel tax cuts extended to September, 200 million eggs to be imported as prices stay elevated

Even as the won-dollar exchange rate has stabilized, falling to the late 1,400-won range, renewed pressure on consumer prices — driven by a surge in global oil prices amid escalating Middle East tensions — has prompted the government to roll out a broad package of measures, including an extension of fuel tax cuts and expanded supplies of eggs and mackerel.

The government convened a special ministerial task force on consumer price management at Government Complex Seoul on Friday, chaired by Deputy Prime Minister and Minister of Economy and Finance Koo Yun-cheol. The meeting finalized plans for fuel tax policy after August and measures to stabilize the supply of eggs and mackerel.

The government decided to extend its temporary fuel tax cut — originally set to expire at the end of this month — by two months through Sept. 30. The reduction rates will remain at 15% for gasoline and 25% for diesel and butane. As a result, the fuel tax per liter will be held at 698 won for gasoline (down 122 won from the pre-cut rate), 436 won for diesel (down 145 won) and 152 won for butane (down 51 won).

The move comes as renewed fighting between the United States and Iran sent oil prices sharply higher. Brent crude for September delivery closed at $100.69 per barrel on the London ICE Futures Exchange on Thursday (local time), up 7.04%. According to Korea National Oil Corp., Dubai crude — the benchmark for South Korea's oil imports — surged 7.78% to $97.19 per barrel on Thursday.

The government said it focused on minimizing the burden on diesel, which is essential to industrial and logistics operations, and on butane, a fuel widely used by lower-income households, given the renewed instability in global oil prices.

To stabilize food prices, the government will urgently import about 200 million fresh eggs. About 49.37 million eggs under contracts finalized by Aug. 10 will be imported, with an average of about 20 million eggs supplied to the market each week through early next month. The sourcing pool will expand beyond existing suppliers — the United States, Thailand and Brazil — to include New Zealand and Poland. To reduce import disruptions caused by avian influenza outbreaks, South Korea is in talks with the United States about narrowing the permitted import zone from the state level to the county level.

Over the medium to long term, the government will provide 370 billion won ($252 million) next year to support facility upgrades at 275 laying-hen farms. This year, it will also pilot 20 billion won in private-sector facility and operating-cost support to allow egg processors to stockpile processed egg products during periods of oversupply.

In addition, the government plans to encourage laying-hen farms to relocate to areas with relatively lower livestock disease risk, such as Gangwon Province, North Gyeongsang Province and South Gyeongsang Province, and will offer incentives including lower interest rates on project loans and expanded compensation for culled birds.

According to the Ministry of Agriculture, Food and Rural Affairs, the farm-gate price of eggs in mid-July stood at 6,818 won per unit, up 16.8% from the same period last year, while the retail price rose 6.7% to 7,418 won.

The Ministry of Oceans and Fisheries will directly import an additional 1,200 tons of mackerel from the United Kingdom and Norway. Of that total, suppliers have already been selected for 200 tons — comprising 24 tons from the UK and 176 tons from Norway. The remaining 1,000 tons will be imported next month.

To reduce over-reliance on a single supply source, the government will hold working-level consultations with the Chilean government next month on expanding mackerel imports. It also plans to purchase about 4,000 tons of export-grade mackerel using 33 billion won and redirect the supply to the domestic market.

The meeting also took up operating plans for the government's ban on hoarding medical syringes and needles, as well as vehicle urea solution and urea.

Restrictions on sales volumes of medical syringes and needles will be lifted, as the government determined that supply and demand have returned to normal. By contrast, the ban on hoarding vehicle urea solution and urea will be extended by one month through Aug. 31, given continued uncertainty over the situation in the Middle East. Under the existing order, importers, manufacturers and sellers of urea solution and urea are still prohibited from holding stocks exceeding 150% of their average monthly sales volume from the previous year for seven or more consecutive days.

Through these measures, the government aims to keep consumer price inflation within 3 percent in the second half of this year. It also plans to announce a separate "Chuseok livelihood stabilization package" in September with additional steps.