Spending Lunar New Year in an Era of High Inflation
Top Stress: 'Holiday Expense Spending'
Simplifying with Ready Meals and Meal Kits
The Lunar New Year holiday has returned without social distancing measures, but the burden on ordinary people is significant due to high inflation. As overall prices rise, more people are worrying about family allowances and Sebaetdon (New Year's money), and some are replacing traditional ceremonial table expenses with convenient meal kits and other easy-to-prepare foods.
Popularity of 'Convenient Meals' Rises as Ceremonial Table Costs Increase
According to Korea Price Information on the 14th, the cost of preparing a Lunar New Year ceremonial table for a family of four is expected to require 254,500 KRW when using traditional markets, a 4.1% increase compared to last year. When using large supermarkets, the cost is expected to rise by 2.1% from last year’s Lunar New Year to 359,740 KRW.
Due to this situation, convenient meals such as meal kits that reduce costs and are easy to prepare are gaining popularity. According to Emart, sales of Peacock ceremonial food convenient meals increased by 22% in the two weeks before last year’s Chuseok compared to the previous year. During the same period, Lotte Mart’s Yori-hada ceremonial food convenient meal sales rose by 35%, and Homeplus’s Signature ceremonial food convenient meal sales increased by 27%.
According to a survey by HR tech company Incruit titled 'Burden and Preparation Plans for This Lunar New Year,' the biggest source of stress during the holiday was 'holiday expenses (21.8%).' Expected expenses for this holiday include an average of 380,000 KRW for family allowances, 210,000 KRW for dining out, 130,000 KRW for transportation, 250,000 KRW for ceremonial preparations, and 400,000 KRW for gifts.
The government is also on alert due to soaring prices. On this day, the Bank of Korea’s Monetary Policy Committee (MPC) raised the base interest rate by 0.25 percentage points from the current 3.25% to 3.50%, marking the first time it has raised rates seven consecutive times (April, May, July, August, October, November 2022, and January 2023). This decision was made based on the judgment that inflation remains unstable. The Consumer Price Index in December last year (109.28) rose 5.0% compared to a year earlier, maintaining a level above 5% for eight consecutive months since May.
Bonuses Decrease... Even Sebaetdon Causes Concern
Although prices have risen, bonuses have actually decreased, leaving office workers with gloomy expressions.
According to the '2023 Lunar New Year Fund Demand Survey' conducted by the Korea Federation of SMEs from December 27 last year to January 5 this year targeting 800 small and medium-sized enterprises nationwide, only 44.3% of SMEs responded that they would pay Lunar New Year bonuses this year, falling short of half. The average bonus per person was 400,000 KRW, down 47,000 KRW from 447,000 KRW last year.
Lee (34), an office worker in Hwaseong, Gyeonggi Province, said, "Because of COVID-19, it’s been a long time since all the relatives gathered for the holiday, but I sigh when I hear that the company bonus will be reduced this year. I wanted to give more with the bonus since it’s been a while since I saw them, but I feel embarrassed."
The burden of inflation is expected to continue for the time being. The MPC forecasted that the consumer price inflation rate will remain around 5% in January and February this year. It is expected to gradually decrease due to base effects and weakening demand pressures, with the annual inflation rate roughly matching the November forecast of 3.6%. The MPC evaluated, "There is significant uncertainty regarding future inflation forecasts related to the degree of domestic and international economic slowdown, increases in public utility fees such as electricity and gas, and movements in international oil prices and exchange rates."
Meanwhile, Cho Kyu-hong, First Deputy Head of the Central Disaster and Safety Countermeasures Headquarters and Minister of Health and Welfare, stated at the Central Disaster and Safety Countermeasures Headquarters meeting at the Government Seoul Office on the 13th, "We will maintain a holiday without social distancing following last year’s Chuseok." Accordingly, social distancing will not be applied during the Lunar New Year holiday from the 21st to the 24th, allowing people to freely meet their relatives.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
