Vacation postponed due to COVID-19, still unable to go this year... Sighs over record-high fuel prices

As the summer vacation season approaches, the aftermath of Russia's invasion of Ukraine has led to significant increases in prices related to fuel, airfare, and dining out, resulting in a heavier financial burden. [Image source=Pixabay]

[Asia Economy Reporter Hwang Sumi] As social distancing measures are eased and daily life is gradually returning to normal, travel demand for the upcoming summer vacation season is expected to increase. However, due to the aftermath of Russia's invasion of Ukraine, prices related to fuel, airfare, and dining out have risen sharply, increasing the cost burden.

Yuanta Securities analyzed that with the full-scale reopening of the domestic economy, indicators related to travel demand are rebounding. Travel expenditure, a subcategory of the travel balance, sharply declined from $2.63 billion (approximately 3.34 trillion KRW) in January 2020 but has been recovering since February this year. As of March, travel expenditure has recovered to about $1.28 billion (approximately 1.62 trillion KRW).

Psychological indicators are also improving. The Consumer Sentiment Index (CSI) for travel expenditure outlook, which had fallen to 59 points due to COVID-19, surged to 101 points in April. This is the highest level since July 2008.

Demand for overseas travel has also increased. The number of overseas travelers, which had decreased to 137,000 in May 2020, surpassed 510,000 as of the 18th of last month. As COVID-19 quarantine measures have been relaxed, travel demand that was previously limited to domestic trips appears to be spreading overseas again.

However, the cost burden for this summer’s vacation season is expected to be significant.

First, both domestic gasoline and diesel prices have been rising for five consecutive weeks. According to the Korea National Oil Corporation’s oil price information site Opinet on the 11th, the nationwide gasoline retail price reached 2,064.59 KRW per liter, breaking the previous record of 2,062.55 KRW set on April 18, 2012, marking the highest price in over 10 years and 2 months.

Airfare is also on the rise. According to the Statistics Korea National Portal Statistics (KOSIS) on the 10th, among the consumer price survey items last month, international airfare and domestic airfare increased by 19.5% and 10.2%, respectively.

On the 2nd, pork was displayed at the meat section sales counter of a large supermarket in Seoul.

The sharply rising dining-out prices are also suppressing consumption. In May, nationwide dining-out prices rose by 9.99% compared to May 2020. This phenomenon occurred as more than half of the 39 surveyed dining-out items, 20 items, recorded price increases of over 10%.

In particular, this year, the consumer price of Samgyeopsal (pork belly) is expected to exceed 30,000 KRW per kilogram for the first time ever. According to the Livestock Products Quality Evaluation Service on the 10th, as of the previous day, the wholesale price of pork was 7,044 KRW per kilogram, more than 24% higher than the same period last year (5,637 KRW). The average retail price of Samgyeopsal also rose by over 11%, from 25,618 KRW to 28,630 KRW per kilogram. Compared to June 2019, before the COVID-19 outbreak (18,964 KRW), it has increased by more than 50%.

This is analyzed to be due to the rise in international grain prices caused by Russia's invasion of Ukraine. As grain prices surged, feed prices increased, which in turn affected meat prices. With the Russia-Ukraine war turning into a prolonged conflict, this upward price trend is expected to continue.

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