Nomura Warns "Asian Food Inflation Has Not Reached Its Worst... South Korea's Second Half Growth at 8.4%"

Korea to Have Second Highest Food Price Inflation in Second Half of Year After India
Concerns Over Sharp Price Surge if Rice Chosen as Wheat Substitute

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyunjung] Nomura Holdings has warned that food price-driven inflation in Asian countries will intensify further in the second half of the year. It forecasted that Korea's food price inflation rate will exceed 8% in the latter half of the year.

According to Bloomberg on the 20th (local time), Nomura released a report stating, "Excluding Japan, food price inflation in Asia rose from 2.7% in December to 5.9% in May." The report added, "Considering the approximately six-month lag between global food price movements and their impact on Asia, the inflation rate is expected to accelerate in the second half of the year," emphasizing that "adverse factors such as China's zero-COVID lockdowns, the outbreak of African swine fever in Thailand, and heatwaves in India are exacerbating the problem."

The report noted, "Consumers' perception of inflation can raise expectations influenced by frequently purchased essentials like food," and stated, "Jakarta and Manila have already raised minimum wage levels in response to rising living costs."

Nomura particularly predicted that food price inflation in the second half of the year will be highest among major Asian countries in India (9.1%) and Korea (8.4%). In Korea, the annual inflation rate for food and non-alcoholic beverages reached 5.9% last year, marking the highest increase in a decade, and an even steeper rise is expected. Additionally, major Asian countries such as Singapore (8.2%), the Philippines (6.9%), Thailand (6.8%), Indonesia (6.3%), and Hong Kong (5.0%) are also expected to experience sharp increases in food prices in the second half of the year.

Nomura stated, "Inflation has already spread beyond grains and cooking oil to categories such as meat, processed foods, and dining out," emphasizing, "Rice, which has maintained stable prices due to abundant stocks, could be next if countries consider it as a substitute for expensive wheat and demand surges." It added, "Although Asian central banks have pledged to monitor supply-side shocks, the impact of rising food prices will trigger monetary policy normalization."

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