Staple Food Prices Rising In South Korea
South Koreans are being hurt by skyrocketing food prices with the high index for fresh food that rose 9.7 percent in February, the highest recorded increase since 2013.
Fresh foods, particularly the average cost of onions has doubled over the past year. Cabbage prices rose 66% as well. This means South Koreans can expect high prices of the all time-favorite Kimchi for several months.
As food prices increase, consumers are likely to spend less. This is attested by Lim Hee Jung, a research fellow for Hyundai Research Institute in Seoul, who said spending is already weak in Korea and the sluggishness could spread if consumers feel that some prices are rising too fast.
Low Inflation Rate But Food Costs Are High
A report in Bloomberg news says South Korea’s inflation rate is hiding the country’s consumers’ real problem: the rising food costs are hurting South Koreans.
Though the overall consumer price gains have remained below or close to 1 percent for a year and a half, the index for fresh foods soared last month. That surge is hurting most South Korean consumers.
Possible Causes of Soaring Food Prices
According to the South Korean government, the recent surge in fresh food prices can be blamed partly on colder weather and snow over winter.
But the worst thing is, it is projected that this ordeal will last a couple of months. This comes after a drought badly affected agricultural yields in the summer.
What Is Contributing to Low Inflation Gauge
Not all commodities have increased in price. For example oil is cheaper at this time and is considered the biggest contributor to the weakness in the inflation gauge.
In addition, the price of services has increased too, and the increase has outpaced overall inflation for almost two years.