Bank of Korea: "Korean Food Price Inflation Rate Higher Than US, Germany, Japan, etc."

If Grain Prices Continue to Rise, Processed Food and Dining Prices Cannot Be Assured Either

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eun-byeol] Last year, the rate of increase in food prices in South Korea was noticeably higher than in major countries. Prices of vegetables, fruits, fish, and meat surged more sharply than in other countries, resulting in a higher perceived inflation among the public. With the continued rise in international grain prices, it is analyzed that this year food prices as well as processed food prices may also increase.

According to the Bank of Korea on the 26th, last year South Korea's food price inflation rate was 4.4%, higher than that of the United States (3.5%), Germany (2.3%), Japan (1.2%), the United Kingdom (0.7%), Spain (2.4%), France (2.0%), and Italy (1.4%). Comparing food prices from July last year to January this year, prices rose by as much as 6.1%. This indicates a pronounced surge in food prices in the second half of last year.

A Bank of Korea official stated, "South Korea's food price inflation rate is the highest among major countries," adding, "Food prices that rose rapidly in the second half of last year have continued to increase at a high rate this year." The recent rise in food prices was largely influenced by increases in prices of agricultural, livestock, and fishery products. Avian Influenza (AI) and worsening weather conditions are representative factors.

The Bank of Korea evaluated that the recent surge in food prices closely resembles the situation in 2010?2011. The consecutive worsening of weather conditions such as typhoons, monsoons, and cold waves, combined with the spread of diseases (foot-and-mouth disease) and the rise in international grain prices, resembles the pattern of further increases in food prices. Since the mid-2000s, there have been a total of four periods of food price increases domestically.

The Bank of Korea expects that the sharp rise in prices of agricultural, livestock, and fishery products will gradually ease as supply and demand conditions improve. However, the possibility of processed food prices rising cannot be ruled out. This is because international grain prices began to rise from the second half of last year. Grain price increases typically have the greatest impact on processed food prices about 10 months later. Although it is understood that domestic processed food-related industries have completed contracts for required quantities until July?August this year, attention must be paid to how long the international grain price rise will continue.

A Bank of Korea official said, "If the recent rise in international grain prices expands or prolongs, it is difficult to exclude the possibility of it leading to an increase in processed food prices," adding, "It will also depend on the speed of domestic demand recovery and the stockpiles of related industries."

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