Bagel Prices Up 44%, Salt Bread 30% in Three Years... Bakeries Say "We're Hurting" Amid 'Breadflation'

Salt Bread and Sandwiches Also See Price Surges of Over 30%
Industry Profitability Declines... "Nothing Left Over"

'Breadflation' has become a reality. Over the past three years, the price of bagels has risen by 44%, while salt bread and sandwiches have increased by more than 30%, turning what used to be affordable snacks into luxury items. However, despite the sharp rise in bread prices, bakery sales are declining and many are operating at a loss, deepening the concerns of small business owners.

The scene of "ETF Bakery," which operated as a pop-up store in Seongsu-dong, Seongdong-gu, Seoul, run by economic YouTuber "Shuka." Photo by Heo Midam

According to the "Bakery Market Trend Report" released by Korea Credit Data (KCD) on October 9, the bread with the highest average monthly sales share in the first half of this year was salt bread (15.7%). This was followed by sandwiches (15.0%), white bread (7.2%), croissants (5.3%), and bagels (5.2%).

KCD analyzed the median price trends of the top 10 best-selling breads in the first half of this year and found that bagels experienced the highest rate of price increase. The median price of bagels, which was in the 3,000 won range in June 2022, rose to between 4,400 and 4,900 won by the end of June this year, marking an increase of about 44% over three years. Sandwiches (32%) and salt bread (30%) also recorded price increases in the 30% range.

In the case of salt bread, prices in the 2,000 to 2,500 won range were common until 2022, but now the 3,000 to 3,500 won range has become the norm. According to the Bank of Korea's Economic Statistics System, the consumer price index for bread in August rose by 6.5% compared to the same month last year, and by 19.4% compared to June 2022. The prices of bagels, salt bread, and sandwiches have risen at nearly twice this rate.

Profitability in the Industry Worsens Despite Price Increases

Citizens choosing bread. Photo by Yonhap News Agency

However, despite the price hikes, profitability in the industry has actually worsened. According to KCD, as of June this year, the average monthly sales for the "bakery and confectionery" sector was about 9.07 million won, but the burden of rent, ingredient costs, and labor costs has surpassed sales, resulting in a shift to operating losses. The "tea house, coffee shop, and cafe" sector recorded an average monthly sales of 7.24 million won, and while the changes in sales and costs were not significant, net profit has been steadily declining.

Meanwhile, in August, economic YouTuber "Shuka" attempted to counter "breadflation" by selling bagels and salt bread for 990 won, but had to stop after just one week. This was because small business owners protested, saying it gave the impression that existing bakeries were making excessive profits.

A gap was also observed between franchise and independently owned bakeries. Large franchises had higher sales indices and lower closure rates, while independent bakeries had relatively lower sales and higher closure rates.