South Korea Cuts LNG and LPG Tariffs to Tame Inflation

South Korea will lower the import duty on LNG and LPG to zero percent in the second half of 2026. This policy is taken to hold inflation when global energy prices are still volatile.

According to a Yonhap report quoted on Friday, June 19, the South Korean Ministry of Finance and Economy said that zero tariffs also apply to crude oil used in the production of LPG. The government hopes that this policy will help reduce utility and transportation costs.

LNG is liquefied natural gas. LPG is liquefied petroleum gas. Both are important for households, industry, and transportation. When energy prices rise, pressure on other commodity prices usually feels the same.

Previously, the government only planned to reduce the LNG tariff to 2 percent in the third quarter and 1 percent in the fourth quarter. The LPG and crude oil tariff for LPG production will also be reduced to 1 percent in the second half of this year.

A ministry official said the government every year examines the impact of the tariff quota system on consumer prices.

"The results consistently show that the system puts downward pressure on consumer prices in the energy sector," the official was quoted as saying by Yonhap.

South Korea's inflation rose 3.1 percent in May from a year earlier. The figure was the fastest rise in 26 months, amid global energy price turmoil.

The tariff quota system allows certain import volumes to receive lower tariffs within the limits set. In this way, the government can make room for certain import supplies without exempting all imports.

Finance Minister Koo Yun-cheol said it would take time for global energy production, transportation infrastructure, and logistics supply chains to recover.

"The impact of rising raw material costs is still felt, and uncertainty has not significantly eased," Koo said in a meeting with a number of ministries related to consumer prices.

He emphasized that the government would use all available measures to stabilize consumer prices.

Yonhap reported that South Korea will also implement a tariff quota system for nine additional agricultural products, including grape concentrate and juice products, as well as two types of animal feed by the end of this year.

The tariff cuts for bananas, pineapples, and mangoes that have been running will be extended until mid-August. The government is considering the harvest season for local fruits such as apples and pears.

This new policy will take effect on July 1 after receiving cabinet approval.