One Month Until Chuseok, Prices of Seasonal Goods 'Fluctuate'... Consumers in Distress

July Consumer Prices Up 6.3%... Highest in 23 Years and 8 Months
BOK "Consumer Prices to Remain Above 6% for the Time Being"

Customers are shopping at a large supermarket in Seoul. Photo by Jinhyung Kang aymsdream@

[Asia Economy Reporter Heo Midam] With Chuseok just over a month away, the prices of seasonal products such as napa cabbage and radish have risen sharply, increasing the cost burden of holiday meals. Typically, during months with holidays like Seollal and Chuseok, demand for seasonal products rises, making price increases likely. Although the government announced plans to prepare related measures within this month, there are criticisms that these will be ineffective given the already significant rise in prices.

According to the 'July Consumer Price Trends' released by Statistics Korea on the 2nd, the consumer price index last month was 108.74 (2020=100), up 6.3% compared to the same month last year. This is the highest increase since November 1998 (6.8%) during the foreign exchange crisis. This upward trend appears to be due to rising prices in dining out and processed foods, as well as a significant increase in agricultural product prices.

In particular, over the past month, with continuous monsoon rains and heatwaves, the prices of vegetables such as napa cabbage and radish have been rising for some time. This is due to pests and diseases affecting crops grown in open fields caused by unpredictable weather. According to the Korea Agro-Fisheries & Food Trade Corporation, as of the 1st, the average retail price of one head of napa cabbage was 6,709 won. This is 3,159 won (88.9%↑) higher than the 3,550 won price a year ago. Additionally, retail prices of radish (68.7%), zucchini (63.4%), green onions (58.7%), and green chili peppers (52.5%) have all increased.

As soaring prices increase consumer burdens, the government announced plans to unveil Chuseok livelihood stabilization measures within this month. On the 1st, Deputy Prime Minister and Minister of Economy and Finance Choo Kyung-ho stated during the Ministry of Economy and Finance’s work report to the National Assembly’s Planning and Finance Committee that the measures will include "stabilizing table prices and reducing essential living expenses in preparation for the earlier-than-usual Chuseok."

[Image source=Yonhap News]

However, some items commonly given as holiday gift sets, such as cooking oil and canned ham, have already undergone price increases. Therefore, even if the government implements measures, there are concerns that the actual perceived effect by consumers will be minimal.

CJ CheilJedang and Dongwon F&B raised prices on some products sold at convenience stores starting this month. CJ CheilJedang increased the price of canola oil (500mL) from 5,500 won to 7,100 won, a 29.1% increase, and grape seed oil (500mL) from 8,800 won to 10,500 won, a 19.3% increase. CJ CheilJedang stated that the price hikes were unavoidable due to rising raw material costs.

Prices of canned ham made from pork also increased. CJ CheilJedang raised the price of Spam Classic (200g) from 4,480 won to 4,780 won, a 6.7% increase, and Dongwon F&B increased the price of Richam Original (200g) from 5,800 won to 6,200 won, a 6.9% increase.

Meanwhile, the Bank of Korea expects consumer prices to continue rising above 6% for the time being. On the 2nd, Deputy Governor Lee Hwan-seok said at the 'Price Situation Review Meeting' that "the consumer price inflation rate showed a 6% level in June as well, which aligns with last month's Monetary Policy Committee forecast," adding, "With elevated inflation expectations, continued high oil prices, and increased demand-side price pressures, the upward trend above 6% is expected to continue for the time being."