"Series of Price Increases" Rising Concerns Over Soaring Food Prices After Seol Holiday

[Image source=Yonhap News]

[Asia Economy Reporter Koo Eun-mo] Concerns are rising that the prices of processed foods and other products are expected to increase one after another after the Lunar New Year holiday, potentially causing a sharp rise in dining table prices.

According to the industry on the 2nd, CJ CheilJedang will raise the prices of sauces by an average of 9.5% starting from the 3rd. Accordingly, the price of 'Woori Ssal Romandeun Taeyangcho Gold Gochujang' (200g) will increase by 250 KRW (7.9%) from 3,150 KRW to 3,400 KRW, and 'Taeyangcho Gold Gochujang' (1kg) will rise by 1,500 KRW (9.4%) from 16,000 KRW to 17,500 KRW.

Daesang also plans to raise sauce prices by an average of 11.3% starting from the 7th, and earlier, Sempio increased the ex-factory prices of 17 types of soy sauce by an average of 8% in December last year. This is the first increase in about four years since 2017. The industry states that price hikes are inevitable as the prices of raw materials used in sauces, such as soybeans and red chili peppers, have risen significantly recently.

Prices of porridge products, which have high demand as convenience foods, will also increase. CJ CheilJedang will raise the prices of 10 types of 'Bibigo Porridge' products sold at convenience stores starting this month. The increase is about 15%. This is the first price increase since the product was launched in 2018. Following this price adjustment, the selling prices of products including 'Bibigo Abalone Porridge,' 'Mushroom Vegetable Porridge,' and 'Beef Porridge' will rise from 3,900 KRW to 4,500 KRW. Prices of pouch porridge mainly sold at large supermarkets will not be increased.

Earlier, Dongwon F&B also raised the supply prices of 12 types of its container porridge products to convenience stores by an average of 15% starting last month. Accordingly, the convenience store selling price of 'Yangban Jeonbok Keunjuk 404g' increased from 4,500 KRW to 5,200 KRW.

Bread is also joining the price hike trend. Paris Baguette will raise prices of some products by an average of 6.7% starting from the 9th. This price increase applies to 66 items including bread and cakes out of 756 items. Paris Baguette explained that "this was an unavoidable decision due to rising raw material costs and various other expenses."

As the price of processed foods has been rising sharply recently, the government also met with the industry to urge efforts to ease price hikes. On the 17th of last month, the Ministry of Agriculture, Food and Rural Affairs held a meeting with five major food companies including Nongshim, Daesang, SPC, CJ CheilJedang, and Ottogi. During the meeting, the ministry introduced support policies for food companies such as the operation of tariff quotas on raw materials causing price surges and expanded tax credits for research and development expenses in new growth and core technologies in the food sector, requesting cooperation from the food industry to stabilize dining table prices.

Kwon Jae-han, Director of Food Industry Policy at the Ministry of Agriculture, Food and Rural Affairs, said, "As the government is making efforts to ease the burden on the industry during the difficult times of COVID-19, we ask the industry to share the pain through management efficiency," adding, "The government will promote support for technology development and deregulation to reduce the industry's burden in the mid- to long-term, in addition to short-term financial and tax support."

According to Statistics Korea, the consumer price index last year was 102.50 (2020=100), which is a 2.5% increase compared to 2020. This is the highest rate of increase in 10 years since the 4% rise recorded in 2011. The rate of increase grew larger toward the second half of the year. At the beginning of the year, the increase rate was between 0-1%, but from October to December, it showed a 3% increase rate for three consecutive months. In December, consumer prices rose by 3.7% compared to the same period last year.