[Hyperinflation Era] A 6% Inflation Tsunami Hits with No Imported Substitutes Available

Imported Beef Prices Approaching Hanwoo Beef Prices

[Asia Economy Reporter Seo So-jeong] Choi Ji-young, a housewife who mainly shops at warehouse-style hypermarkets, was startled when she visited the meat section last weekend. Despite the long distance, she often goes there because she can buy Korean beef (Hanwoo), which is usually expensive, at a relatively lower price. However, the price for 595 grams (g) of Hanwoo reached 61,761 won. Imported beef displayed on another shelf was priced at 8,580 won per 100g, meaning 600g would cost 51,480 won, nearly matching the price of Hanwoo. Choi said, "The price of imported beef, which used to be about one-third of Hanwoo, has recently risen noticeably, making me hesitate to buy it," adding, "In the past, when domestic beef prices rose, I would buy imported beef as a substitute, but these days, imported beef is also burdensome," shaking her head.

With prices soaring uncontrollably not only for dining out and processed foods but also for imported agricultural and marine products, an unprecedented ultra-high inflation shock in the past 20 years is hitting the tables of ordinary people. While we have experienced high inflation caused by fluctuations in oil prices and domestic agricultural and marine product prices, the current ultra-high inflation era?where even imported agricultural and marine products are rising simultaneously and substitutes have disappeared?is truly an unknown territory. The consumer price inflation rate, expected to reach the 6% range in the second half of this year, is a figure not seen since the 2000s.

According to Statistics Korea on the 7th, the price of imported beef in May jumped 27.9% compared to a year ago, fueling the rise in food prices. Imported beef has long been favored as a substitute for expensive Hanwoo, but the prolonged Ukraine crisis disrupted grain supplies and caused feed costs to soar, driving prices up sharply. This is not the only issue. Pork prices rose 20.7% compared to a year ago, and chicken prices also surged 16.1% year-on-year. Even prices of agricultural, livestock, and marine products, which had recently slowed their rise, are soaring, and with dining out and processed food prices rising uncontrollably, there are self-deprecating voices calling this an "unprecedented high inflation."

The problem is that this inflationary trend is expected to continue until next year. Experts predict that consumer price inflation rates in June and September could exceed the current 5% range and enter the 6% range. The ongoing Ukraine crisis and supply chain disruptions have not been resolved, and since consumer price inflation rates were only 2.3% and 2.4% in June and September last year, respectively, a base effect is likely to take place. Consumer price inflation rates exceeding 6% have not been seen since November 1998 (6.8%). Even during the Lee Myung-bak administration, when inflation was similar to now, the highest rate was 5.9% (July 2008).

Park Seok-gil, Chief Economist at JP Morgan, said, "If the current trend continues, inflation rates in June and September are expected to peak," adding, "Even after that, inflation rates in the 4% range will continue for a considerable period, making the peak less meaningful."

Lee Seung-heon, Deputy Governor of the Bank of Korea, expressed concern, saying, "The consumer price inflation rate exceeded 5% (5.4%) last month for the first time since the global financial crisis, and a high increase in the 5% range is expected to continue in June and July. With international oil and food prices remaining high and demand-side pressures increasing due to the recent lifting of social distancing measures, the spread of inflationary pressures may continue." In particular, variables causing high inflation show no signs of easing, further increasing upward pressure on prices.

Joo Won, Research Director at Hyundai Research Institute, said, "Consumer price inflation rates could reach the 6% range in June or July."

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