Korean Economy News
Korea faces recession-type inflation amid strengthening in prices from supply pressure

[Photo by Yonhap]

[Photo by Yonhap]

Consumer prices are strengthening amid the jump in fresh food, oil, and poultry prices due to extreme climate conditions, hardening livelihood for Koreans grappling with reduced income and job losses from protracted Covid-19 hardship.

McDonald’s Korea became the latest among franchise majors to raise menu prices, citing higher raw material prices. Prices of its burgers and others on the menu would go up by on average 2.8 percent from Feb. 25.

The local branch of global fast-food giant McDonald’s said the price hike was inevitable as the cost of main ingredients such as meat, eggs, and vegetables have lately jumped 20 to 30 percent, coupled with the spike in labor costs.

Lotteria, another fast-food franchise in Korea, increased the prices of its burgers, drinks and others by 1.5 percent on average this month.

Paris Baguette, the country’s largest bakery chain, also upped the price tags of its 95 products, or 14.4 percent of its total offerings, by 5.6 percent on average.

Tous Les Jours, the No. 2 bakery chain, has raised 9 percent or more on 90 some products from last month.

Inflation is expected to go up in spite of lackluster demand due to pressure from the supply end.

The producer price index, measuring the wholesale price of goods and services supplied by local producers, came at 104.88 in January, up 0.9 percent from a month earlier, according to the Bank of Korea data on Friday.

Against a year earlier, the index was up 0.8 percent, extending the gain for a second straight month.

Agricultural, fishery and livestock product prices jumped 7.9 percent in January from a month earlier, marking the steepest gain since August 2018. Livestock prices soared 11.8 percent and agricultural prices 7.8 percent amid extended cold waves coupled with bird flu outbreaks. Poultry prices gained 42.8 percent, eggs 34 percent, onions 29.5 percent, and spring onions 53 percent.

Industrial goods prices increased 1.0 percent on an uptick in global oil prices. Diesel price rose 9.7 percent, Naphtha 14 percent, and gasoline 7.5 percent.

Service prices were up 0.5 percent on month. Financial and insurance service prices inched up 2.3 percent, transportation 0.7 percent, and IT/broadcasting 0.7 percent.

“The producer price index is projected to stay on the upward trend in February as the prices of raw materials including fresh produce and oil are expected to continue growth,” said Kim Young-hwan, an economic statistics official at the Bank of Korea.

The domestic supply price index, which measures price fluctuations of goods including imports, added 1.6 percent on month but it fell 1.3 percent from a year earlier.

The total output price index, including exports and domestic shipments, gained 1.2 percent from a month earlier.

By Pulse

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]

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