[Inside Chodong] 'Price Stabilization' That Only Demands Corporate Sacrifice... Fundamental Solutions Are Needed

Apple and Pear Prices Climb Again After Brief Lull
Government's All-Out Support Has Only a Temporary Effect
Need for Price Stabilization Measures That Consider Corporate Survival

The previously stagnant apple prices are stirring again. As the government rolls out comprehensive price stabilization measures to curb soaring fruit prices, apple prices, which had slightly dropped earlier this month, have recently resumed their upward trend. According to the Korea Agro-Fisheries & Food Trade Corporation (aT) on the 29th, the nationwide average retail price for 10 apples as of the previous day was 25,437 won, marking a 4.65% increase compared to a week ago. Although the upward trend seemed to pause after surpassing 30,000 won at the beginning of the month, prices rebounded as discount events at large supermarkets ended. During the same period, the average price for 10 pears rose nearly 10% (9.75%) to 43,144 won, exceeding 40,000 won again within a week.

The residual upward momentum in apple and pear prices remains strong due to continued rises in wholesale prices. The wholesale price for 15 kg of pears climbed to 113,400 won, soaring 22.71% in just one month. The wholesale price for 10 kg of apples increased by 3.1% to 92,040 won. Compared to wholesale prices a year ago, these figures have more than doubled.

The sharp rise in apple and pear prices has fueled a domino effect on agricultural product prices, pushing consumer prices higher. Agricultural product prices contributed to over 80% of the total inflation increase in February. In particular, fresh fruit prices surged by more than 42% in February, reaching their highest level in 32 years and 5 months.

As a result, the government is mobilizing distribution companies to wage an all-out battle against inflation. It has injected 150 billion won worth of 'emergency agricultural and livestock price stabilization funds' to support price discounts at large supermarkets. Key policymakers have been visiting distribution sites almost daily, urging companies to cooperate in stabilizing prices. However, these comprehensive government measures have only produced a temporary 'flash effect' in lowering retail prices of apples and pears. Wholesale prices continue to rise, and experts predict that prices will not easily fall until the new apple harvest arrives in July.

The problem lies in the government continuing to pressure companies to reduce prices as the effectiveness of its inflation measures wanes. A distribution industry insider said, "The government talks about participation, but the atmosphere is practically coercive," adding, "The government has stated it will take strong action if there is evidence of collusion or other offenses, so who would dare not to comply?" In fact, on the 18th, President Yoon Suk-yeol visited the Nonghyup Hanaro Mart Yangjae branch and said, "We will respond strictly to unfair practices such as excessive price hikes and collusion for profiteering." The Fair Trade Commission is currently investigating allegations of collusion among three sugar companies.

The government has previously requested companies to lower prices and refrain from raising them. Ahead of last year's Chuseok holiday, it pressured companies to reduce prices. However, right after Chuseok, prices for dairy products and dining out surged again. Since this year's Lunar New Year, consumer prices have soared. This is evidence that pressuring companies yields limited results.

The Ukraine war and Middle East conflicts are ongoing, and risks of raw material and fuel price surges due to the climate crisis remain. Companies are resisting further price cuts as overall costs, including domestic logistics, rent, and labor, continue to rise. The government needs to develop long-term price stabilization measures that consider corporate survival. Pressuring companies to lower prices may backfire and harm consumers instead.