Prices Rise Across the Board from the Start of the New Year...Beverages, Cosmetics, and Household Goods Stir Consumer Burden (Comprehensive)

[Asia Economy Reporter Lee Seon-ae] From the very beginning of the new year, living costs are showing signs of significant change. Companies that were unable to raise prices last year due to the impact of the novel coronavirus disease (COVID-19) are now simultaneously increasing prices at the start of the year, which is expected to increase the burden on consumers.

Cola Prices Raised for the First Time in 4 Years

According to LG Household & Health Care on the 4th, its beverage subsidiary Coca-Cola Beverage raised the prices of major products as of the 1st. The price of a 'Coca-Cola' can sold at convenience stores increased from 1,400 won to 1,500 won, the 500ml PET bottle from 2,000 won to 2,100 won, and the 1.5L PET bottle from 3,400 won to 3,600 won. In addition to Coca-Cola, Coca-Cola Beverage adjusted the price of the carbonated water 'Seagram' from 1,300 won to 1,400 won, a 100 won increase.

A representative from Coca-Cola Beverage explained, "The price increase for convenience store cola products is the first in 4 years and 2 months since November 2016," adding, "Price adjustments were inevitable due to changes in the distribution environment and rising costs, but we are continuously striving to reduce expenses."

Haitai htb raised prices not only for 'Gara Madeun Bae' (pear juice) but also for the bottled water Pyeongchang Water. Dong-A Otsuka also increased prices for all its main products, including 'Pocari Sweat,' 'Demi Soda,' and 'Oronamin C.' This is the first price increase by Dong-A Otsuka in about 2 years and 7 months since May 2018. A Dong-A Otsuka representative said, "We had refrained from raising prices as much as possible, but due to accumulated inflation factors and overall increases in raw material costs, logistics costs, and other company expenses, the price increase became unavoidable."

Prices of Cosmetics and Household Goods Also Fluctuate

Prices of cosmetics and household goods are also fluctuating. LG Household & Health Care adjusted the prices of all products under its cosmetics brand 'belif' as of the 1st. The average increase rate is around 10%. A belif representative stated, "We have tried to maintain reasonable prices despite increases in raw materials and sales management costs, but due to continuous rises in auxiliary materials and expenses, it became unavoidable to raise prices across all products." Korea P&G raised the prices of four types of Febreze Baseline?Fresh Scent, Subtle Scent, Downy Scent, and Herb Scent?as of the 1st. Accordingly, the price of Febreze Baseline increased from 5,900 won to 6,500 won, a 10.2% rise.

As manufacturers raised supply prices, convenience store chains also adjusted their prices one after another. Seven Eleven raised the prices of 15 types of 'Duracell' batteries by an average of 3% on the 22nd of last month. The price of two 'Duracell Deluxe' batteries reached 3,000 won, making the price per battery 1,500 won. GS25 raised prices for some over-the-counter medicines and quasi-drugs on the 21st of last month. 'Daeil Band Smart' saw the largest increase, rising 25% from 3,900 won to 4,900 won. Prices for other household medicines such as 'Daeil Band Mixed 21,' 'Daeil Band Regular 8,' wound treatment ointment 'Madecassol Ointment 8G,' and digestive medicine 'Bea Je Jeong' also rose simultaneously.

Inflation Rate at 0%, but Grocery Prices Surge

The sharp price increases in the food and beverage industry are due to soaring raw material prices. According to Statistics Korea, the consumer price index in 2020 rose by 0.5% compared to the previous year, marking the second-lowest figure ever recorded, but grocery prices such as meat and vegetables have risen significantly. Last year, prices of agricultural, livestock, and fishery products increased by 6.7% compared to the previous year, the highest in nine years since 2011 (9.2%). In particular, onion prices, widely used both at home and in restaurants, rose by 45.5%, napa cabbage by 41.7%, and pork and domestic beef prices increased by 10.7% and 8.3%, respectively.

The inflationary pressure is due to increased demand coupled with poor crop yields leading to reduced supply. After COVID-19, telecommuting became routine, and social distancing continued, increasing demand for not only fresh ingredients but also processed foods. Additionally, adverse weather conditions such as the longest rainy season and typhoons worsened crop yields, and recently, the outbreak of avian influenza (AI) has led to increased culling of poultry such as chickens and ducks, sharply reducing supply. Last year, egg prices rose nearly 8.6% compared to the previous year.

A food and beverage industry official said, "Demand has increased compared to before, but with raw material prices soaring, processed food prices continue to rise," adding, "If prices of agricultural, livestock, and fishery products do not stabilize in the first half of the year, processed food companies will inevitably have to implement further price increases."

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