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Gov't looking into milk makers' push to raise prices: sources

2013/08/06 09:30

SEJONG, Aug. 6 (Yonhap) -- The government has launched an evaluation into major milk makers' push to raise their product prices, worrying that such price hikes could make other milk-based goods more expensive and eventually drive up the overall inflationary pressure, government sources said Tuesday.

The move comes as Seoul Milk and Maeil Dairies will raise their milk prices on Thursday and Friday by 250 won (US$0.23) per liter. The country's major milk producers claim that 106 won is linked with increased raw milk prices, while the rest reflects rising labor and distribution costs for the first time since 2008.

Critics admit that they need to reflect higher production costs, including rising consumer prices, but suspect that milk makers might be pushing for excessive price hikes by ballooning labor and distribution costs.

"We are looking into whether it is appropriate for the milk makers to raise prices from diverse angles," a finance ministry official said on condition of anonymity. "If we found any problem with the pricing process, we could take measures, in the worst case, aimed at inducing price cuts of major milk producers."

   Since milk is used in many other food items such as bread, coffee and ice cream, the government has been closely monitoring its price movement on worries that a price hike could hurt the livelihoods of low- and mid-income earners.

"We will step up our monitoring on how milk price hikes could have ripple effects on the costs of bakery, confectionery and other fermented milk products, while considering corresponding countermeasures," the official added.