The Two Faces of COVID-19 Inflation: Only Prices That Rise Are Rising

Photo by Asia Economy DB

[Asia Economy Reporter Lee Seung-jin] While overall consumer prices remain stagnant, a phenomenon of continuous price increases for specific food ingredients is emerging. This is analyzed to be due to the increased demand for home-cooked meals amid the novel coronavirus disease (COVID-19) pandemic.

According to the Korea Agro-Fisheries & Food Trade Corporation (aT) on the 14th, the consumer price for 1st grade Korean beef sirloin was recorded at 10,110 KRW per 100g as of the 4th. This is the first time since January 2011, when related statistics became available, that the price per 100g has exceeded 10,000 KRW. Although the price slightly declined afterward, as of the 14th, the price per 100g remains at 9,934 KRW, which is a staggering 1,900 KRW higher than the same period last year.

The price of Korean beef sirloin has sharply risen since COVID-19. At the end of February, the price per 100g was maintained in the 9,100 KRW range, but it surpassed 9,300 KRW in March, entered the 9,900 KRW range in May, continuously setting new highs, and finally exceeded 10,000 KRW in June.

This is analyzed to be due to increased household meat demand as social distancing continues amid COVID-19. Prices rise when supply decreases or demand increases, but the amount of beef distributed recently has slightly increased compared to last year, indicating that consumption of beef has grown due to COVID-19. Last month, the government's emergency disaster relief payments to all citizens also contributed to increased consumption, which is believed to have influenced market prices.

The same applies to pork. According to the Livestock Products Quality Evaluation Institute, the price of pork belly per 1kg was around 18,500 KRW in June last year but rose to 24,459 KRW as of the 12th, increasing by nearly 6,000 KRW in one year. Pork belly consumption had slowed down at the end of last year due to African Swine Fever (ASF), causing prices to drop to as low as 15,000 KRW at one point, but prices surged significantly as consumption concentrated due to COVID-19.

On the other hand, some items saw price decreases due to COVID-19. As demand for cherries in the United States declined amid the pandemic, export volumes increased, leading to a roughly 10% drop in import prices in May compared to the same month last year.

Additionally, high-end ingredients such as king crab, snow crab, and lobster have seen price drops due to decreased demand from COVID-19 and simplification of distribution stages. The export route of Russian king crab to China was blocked due to COVID-19, causing prices to plummet temporarily. Snow crab and lobster prices also fell as consumption slowed in China, one of the largest seafood consumers, resulting in a price reversal with flower crab prices.