"Really Too Much Increase" Russia-Ukraine Crisis, Flour Price Surge... Common People Struggling

Imported Grain Prices Rise 47% in 2 Years... Highest in 8 Years 9 Months
IMF Warns Russia-Ukraine Conflict Could "Change Global Economic Order"

Citizens are shopping at a large supermarket in Seoul. [Image source=Yonhap News]

[Asia Economy Reporter Heo Midam] "Prices were already rising, but now they are going up even more because of Russia."

Since Russia's invasion of Ukraine, the global prices of food, including grains, have been rising sharply. Both countries are major producers of key crops such as wheat and corn, often called the "world's granaries." However, as the war drags on, farming has become impossible, causing grain prices to surge. In particular, the rising cost of flour is making it difficult for the restaurant industry to absorb the increase, raising the possibility of price hikes for products like pizza and bread.

Given this situation, the sighs of ordinary people are growing deeper. With incomes not increasing but prices soaring, the lives of the common people are becoming more difficult. Experts predict that the impact of rising prices will be especially severe for single-person households who must bear the full cost of food, clothing, and shelter alone.

According to the Korea Customs Service and the food industry on the 16th, last month's grain imports totaled 1.964 million tons, with an import value of $758.31 million. The price per ton was $386, up 26.0% from $306 in the same month last year.

This is 47.4% higher than the $262 per ton recorded in February 2020, before the COVID-19 pandemic fully took hold. As a result, the price per ton of imported grains in February this year reached its highest level in 8 years and 9 months since May 2013 ($388).

However, the upward trend in grain prices is expected to continue for the time being due to Russia's invasion of Ukraine. Russia and Ukraine, the world's largest grain exporters, account for about one-third of global wheat and barley exports. But the current situation has made grain production and distribution difficult.

In particular, South Korea's wheat self-sufficiency rate was only about 0.8% as of 2020, heightening concerns. Ultimately, the rise in international wheat prices will push up the price of flour produced by domestic milling companies, inevitably leading to price increases for ramen, snacks, bread, pizza, and hamburgers.

Citizens are shopping at the food section of a supermarket in Seoul. The photo is unrelated to specific expressions in the article. [Image source=Yonhap News]

As a result, the sighs of ordinary people are growing even deeper. Rising prices reduce real income, delivering a direct blow to the common economy. Especially for low-income groups, where the consumption share of essential goods is high in household spending, price increases hit even harder.

Choi (25), a graduate student living alone in Mapo-gu, Seoul, said, "Delivery food is expensive, so I try to cook myself, but every time I shop, I am shocked by how high the prices of ingredients are." He added, "I really feel the price increase. These days, even with just a few ingredients, it easily costs over 30,000 won." He continued, "If prices go up any more than this, it will be really tough."

Office worker Jung (26) also said, "I'm scared that prices will rise even more. Ramen and bread are the products that ordinary people like us buy the most." He added, "I'm worried. People are already struggling because of COVID-19, and if prices go up even more, it will be unbearable. Life is really tough."

Meanwhile, due to the Ukraine crisis, raw material prices including international oil prices surged, causing South Korea's import prices to rise for two consecutive months last month. Import prices affect consumer prices with a time lag.

According to the "February 2022 Export and Import Price Index" released by the Bank of Korea on the 15th, last month's import price index was 137.34, up 3.5% from the previous month. Compared to a year ago, it jumped 29.4%.

Given this situation, warnings have emerged that Russia's invasion of Ukraine could change the global economic order in the long term. The International Monetary Fund (IMF), in a blog post titled "How the Ukraine War is Reverberating Across the World," expressed concern that "beyond the pain and humanitarian crisis caused by Russia's invasion of Ukraine, the entire global economy will feel the effects of slower growth and accelerated inflation."

It added, "Rising prices of food and energy-related products will deepen inflation, eroding income value and burdening demand."

Experts expect the impact of rising prices to be especially severe for single-person households. Professor Eunhee Lee of Inha University's Department of Consumer Studies pointed out, "When prices rise, the difficulties of ordinary people worsen. Especially for single-person households who must bear all the costs of food, clothing, and shelter alone, the impact will be even greater."

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