Rice Prices Increased Only '3 Times' in 40 Years... Gangnam Apartment Prices Soared by '84 Times'

Hana Financial Research Institute Releases 'Price Trend Analysis of Major Domestic Goods and Services: 1980~2020'
Gangnam-gu Eunma Apartment 3.3㎡ Sale Price 770,000→64,690,000 KRW 84x, Jeonse Price 160,000→16,290,000 KRW 101x
Cup of Coffee 200→4,100 KRW About 21x, Pack of Cigarettes 300→4,500 KRW 15x

[Asia Economy Reporter Kangwook Cho] Over the past 40 years, rice prices have tripled, while the price of apartments in Gangnam has surged by 84 times. In particular, most food ingredient prices have not risen significantly, and when compared to the gross domestic product (GDP) per capita, they have effectively decreased in real terms.

Hana Financial Management Research Institute, affiliated with Hana Bank, announced a report on the 29th that studied the impact of price changes in major goods and services on the economic activities and daily lives of Korean citizens by analyzing public data related to domestic prices and past media article texts.

According to the report, the nominal price increase rates of most consumer goods such as agricultural and marine products and manufactured goods over the past 40 years were lower than the increase rate of GDP per capita, indicating that the real prices perceived by consumers have decreased.

In particular, due to technological advances, productivity improvements, and expanded trade, the perceived prices of manufactured goods such as beverages, snacks, and TVs have significantly decreased. Rice and chicken prices rose only about threefold over 40 years, and most food ingredient price increases were lower than the GDP growth rate, resulting in a decrease in perceived prices. On the other hand, the sale price of apartments in Gangnam, Seoul, rose about 84 times, the jeonse (long-term lease) price increased 101 times, and the price of a cup of coffee rose about 21 times, showing some items with higher price increases compared to other categories.

◆ Food ingredient prices have effectively decreased over 40 years... Gangnam apartment prices have surged

Comparing the nominal price trends of various types of goods and services over the past 40 years with economic growth rates and various wage data, rice prices (based on 4Kg) rose from 3,000 won to 9,500 won, a 3.2-fold increase; chicken (based on 1Kg) rose from 1,400 won to 4,656 won, a 3.3-fold increase; and lettuce rose about 8.5 times. Most food ingredient prices increased less than ninefold over 40 years. Considering the GDP per capita increase rate during the same period (35.5 times in Korean won, 18.5 times in US dollars), the actual perceived prices have significantly decreased.

On the other hand, watermelon (16.7 times) and napa cabbage (12.5 times) showed relatively higher price increases compared to other food ingredients. Meanwhile, the price of apartments in Gangnam, Seoul, showed a higher increase rate than GDP per capita. For example, the sale price of Eunma Apartments in Gangnam-gu, based on 3.3㎡, rose from about 770,000 won in 1980 to 64,690,000 won, an approximately 84-fold increase over 40 years, and the jeonse price rose from 160,000 won to 16,290,000 won, a 101-fold increase, showing a stark contrast to other analyzed items.

◆ Major manufacturing and service items show real price decreases... public goods and luxury items relatively increase

According to the report, the price of domestically produced mid-sized cars rose from 3.89 million won in 1980 to 23.9 million won currently, a 6.1-fold increase; cola rose 4.5 times (based on 1.5ℓ), soju rose 5.1 times (based on factory price), and movie ticket prices rose 6.7 times, all showing lower increases than the GDP per capita growth rate, indicating a real price decrease. Additionally, due to technological progress, productivity improvements, and the popularization of substitutes, the nominal prices of color TVs (20-inch) and international calls (Korea-US, 1 minute) fell by 45% and 77%, respectively.

The basic subway fare in Seoul rose from 80 won to 1,250 won over 40 years, a 15.6-fold increase, and the basic taxi fare rose from 400 won to 3,800 won, a 9.5-fold increase. Hospital consultation fees (initial visit) rose 9.9 times, cultural heritage admission fees rose 10 times, and national university tuition fees rose 19 times. Services supplied or price-controlled by the government and public institutions showed relatively higher price increases compared to private consumer goods.

Luxury item prices also rose sharply. The price of a cup of coffee rose from 200 won to 4,100 won, about 21 times, and a pack of cigarettes rose from 300 won to 4,500 won, 15 times, showing higher price increases compared to other items.

◆ One-time dating costs increased 8.6 times... working hours needed to cover costs greatly decreased

This report also attempted an analysis comparing various wage levels with prices. The hourly minimum wage, which was 690 won in 1990, rose nominally 12.4 times to 8,590 won in 2020, exceeding the GDP per capita growth rate over the past 30 years (7.9 times in Korean won, 4.8 times in US dollars). Additionally, the monthly salary of government employees (entry-level grade 7) rose from 239,000 won to 1.88 million won, a 7.9-fold increase, and the salary of enlisted soldiers (sergeant in the army) surged from 3,900 won in 1980 to 541,000 won currently, a staggering 139-fold increase.

Furthermore, changes in our lives considering price and wage increases were examined. For example, dating costs (including movie tickets, meals, and coffee) were 18,800 won in 1990 and about 61,200 won currently, an 8.6-fold increase. However, the part-time working hours needed to earn this dating cost (based on minimum wage) decreased from 28 hours in 1990 to 8 hours currently.

Jung Hoon, a research fellow at Hana Financial Management Research Institute, said, "Through this study, we quantitatively confirmed that the real prices of major consumer goods have mostly decreased over the past 40 years." He added, "However, since the analysis is based on average values, considering the recent deepening income polarization, there may be differences in the perceived prices for low-income groups."

This content was produced with the assistance of AI translation services.