Explainer: Why do food prices in S. Korea keep going up?
Updated: 2021-11-24 17:06:44 KST
Now, many grocery shoppers in South Korea have been noticing an increase in food prices recently.
To find out more about why prices are creeping up, and which items are worst affected, we have our Jang Tae-hyun in the studio.
Good evening, Tae-hyun.
Great to see you Jung-min.
So, Tae-hyun, consumer prices seem to be going up?
WELL Jung-min, prices have increased.
And before I give you the numbers, I'd like to share with you what some grocery shoppers told me about how this is affecting them.
"I can actually sense the rise in food prices and there's a burden when shopping for groceries. And when I check the receipt, it seems the prices have gone up."
Others also said they have to check the price and think twice before putting items into the cart.
Because, if they buy whatever they want the total price will be way more expensive than what they were expecting.
And another concern is that now is the time for South Korean families to gather together and do 'kimjang' making lots of kimchi to store ahead of the long winter.
When I say family, it's not a four-person family it includes relatives too so when people make kimchi, they often make it for more than a dozen people.
So they have to buy tens or hundreds of cabbages, depending on the number of people.
But the cost of making kimchi has soared compared to the previous year.
"There are not many cabbages so it's more expensive so there are many people who can't do kimjang. Others do it with radish. But, I still did kimjang with 36 cabbages. Three cabbages were 10-thousand won last year, but this year, they were 18-thousand. It was 8-thousand won more expensive while their condition was worse. But, I still had to do it for my children."
Data from the Korea Price Research Center shows that there was a spike in prices of kimchi ingredients.
The wholesale price of cabbage stands at 3213 won, which is an increase of more than 48 percent on-year.
Experts say the price of cabbage went up because of the weather as well as an outbreak of a bacterial soft rot.
Even garlic is 8425 won per kilogram and that's a roughly 30 percent increase on-year.
That's a sharp increase. Is it the same for other types of food that people often eat?
YES. Prices of one of Koreans' favorite foods fried chicken has also gone up.
Chicken brand Kyochon has increased its prices by more than 8 percent.
One of its most popular menus 'honey combo' went up from 18-thousand won to 20-thousand won.
That's about 17 U.S. dollars.
And as Kyochon is one of the leading brands in the market other fried chicken brands are also raising prices.
Even canned tuna is more expensive with Dongwon raising the prices of 22 types of its tuna cans by 6.4 percent.
Seoul Milk also increased its prices by more than 5 percent.
So, Tae-hyun, the consumer price index increased by how much?
AMID surging global oil prices, all of South Korea's cities and provinces saw a rise in consumer prices in the third quarter of this year.
Data released by Statistics Korea on Monday shows that the consumer price index in Q3 edged up 2.6 percent from a year ago.
That is the biggest increase in nine-and-a-half years.
Inflation was the worst in Jeollabuk-do Province and Jeju Island, at 3.2 percent.
But Seoul's rises were smaller as they were offset by the reduced cost of utilities.
You mentioned oil prices. Is that the reason for the rise in prices overall?
WELL, the rise in oil and raw material costs has led to a rise in production prices.
And that is also affecting the consumer prices.
Experts say that the rise in producer prices can affect consumer prices after one or two months.
South Korea's producer price index in October saw its fastest increase in 13 years.
The Bank of Korea says the PPI last month spiked by 8.9 percent on-year.
I see. And this will make it much harder for small business owners or vendors.
I went to a traditional market in Seoul to ask the sellers if they could feel that the producer costs had gone up.
"Prices of water parsley, seasoned pigweed, pepper leaves, pepper, eggplant and cucumber have all gone up."
She said, the retail price of one cabbage used to be around 2-thousand won, but now it's 5-thousand won, which is a little over four dollars.
That's the highest price she's seen in recent years and she added that some people have even given up buying vegetables.
For meat as well, one vendor said, there's not much revenue left considering the amount they pay for beef and pork.
"Well, livestock farmers will be having a hard time producing because of the rise in the cost of feed. I can understand that. The price of Hanwoo, or Korean beef went up by 20 percent on-year. So, people buy less because it's pricey."
The prices of fish like halibut are also affected for a range of reasons, from climate change to a lack of labor, and the shortage of urea affecting the distribution process.
Alright. And before you go, I have one last question. Is the rise in producer prices only happening in South Korea?
WELL, this is happening in other countries too including the U.S. and China raising concerns of global inflation.
U.S. producer prices went up 8.6 percent in October.
That's the highest figure in nearly 11 years.
It's driven by surging costs of gasoline and motor vehicles suggesting that high inflation could persist for a while amid tight global supply chains.
And for China, producer prices jumped 13.5 percent on-year the fastest pace in 26 years.
It's due to the higher raw material costs and factory production cuts following the coal shortages in China, although the power crunch there is now starting to ease following government measures.