"Seubuk Again"... Prices Fluctuating with Temperature 'Heatflation' [News Terms]

‘Heatflation’ refers to the phenomenon where heatwaves impact the crop yields of agricultural, livestock, and fishery products, causing food prices to rise sharply. It is a compound word combining the English word ‘heat’ and ‘inflation,’ which means continuous price increases.

The Korean Peninsula is boiling. According to the Korea Meteorological Administration on the 4th, the highest temperature in Yangsan-si, Gyeongnam, reached 39.3 degrees Celsius. At 3:33 p.m. that day, the temperature in Jeomdong-myeon, Yeoju-si, Gyeonggi-do, rose to 40 degrees. Tropical nights are expected to continue at least until around Liberation Day. In June, the U.S. National Centers for Environmental Information (NCEI) reported that the average surface temperature difference between the Korean Peninsula and the Earth from January to May this year was 1.39 degrees Celsius. This is the highest since scientists first measured broad and consistent global surface temperatures in 1850.

A citizen standing in front of Starbucks
Photo by Yonhap News

There is an analysis that the rise in domestic temperatures temporarily increases upward pressure on domestic inflation. According to the Bank of Korea’s report titled ‘The Impact of Climate Change on Domestic Inflation,’ a temporary 1-degree increase in temperature due to heatwaves raises the agricultural product price increase rate by 0.4 to 0.5 percentage points and the overall consumer price index increase rate by 0.07 percentage points. Furthermore, if the 1-degree temperature shock persists for one year, it is estimated that agricultural product price levels will be 2% higher and overall consumer price levels will be 0.7% higher after one year. This suggests that climate change could be a factor that increases inflationary pressure and volatility in the medium to long term.

Extreme heat is actually threatening the prices of food on the table. According to the Korea Agro-Fisheries & Food Trade Corporation (aT) Agricultural Product Distribution Information (KAMIS) on the 4th, prices of major agricultural products in the first week of August rose significantly compared to the average year. The wholesale price of one watermelon, a seasonal fruit, was 27,230 won, up 51.4% from the average year (17,987 won). The wholesale price of 10kg of napa cabbage (3 heads in a net bag) was 15,800 won, a 50.9% increase from the average year (10,469 won). Prices of radish (20kg, 67.8%) and carrots (20kg, 89.1%) also far exceeded the average year’s prices.

The livestock and fishery industries are also experiencing increased damage from the heatwave. According to the Ministry of the Interior and Safety on the 5th, from June 11 to this month’s 3rd, a total of 257,483 animals died, including 235,880 poultry such as chickens and ducks, and 21,603 pigs. In fish farms, 5,867 flatfish died across six households. A fishery household refers to a household that has directly managed fishing, harvesting, or aquaculture of seafood for at least one month in the past year for sales purposes. Such overall production declines in various industries due to the heatwave lead to increases in raw material prices, which can also affect processed food prices.

A citizen is shopping at a large supermarket in downtown Seoul. Photo by Mun Ho-nam munonam@

Heatflation also negatively impacts the global economy. The Potsdam Institute for Climate Impact Research (PIK) in Germany forecasts that by 2035, global warming and heatwaves will cause food prices to rise by up to 3.2 percentage points annually and overall prices to increase by up to 1.2 percentage points annually.

The rise in international coffee bean prices follows a similar trend. Reports from foreign media indicate that Brazil and Vietnam, the world’s first and second largest coffee bean producers, have faced the worst droughts this year, strengthening expectations that coffee bean prices will continue to soar. The price of Robusta beans, mainly used in coffee mix production, was traded at $4,141.4 per ton on the London International Financial Futures and Options Exchange (LIFFE) as of June. This is a 50.95% increase from the same month last year ($2,743.55), marking an all-time high. Additionally, the price of Arabica beans, commonly used in coffee shops, was traded at $5,012.38 per ton on the Intercontinental Exchange (ICE) in New York as of June, a 27.62% increase over one year. This price trend is one of the reasons Starbucks Korea raised the prices of Grande (473ml) and Venti (591ml) sizes by 300 won and 600 won respectively on June 2, after 2 years and 6 months.