Rising Prices Increase Food Expenses Burden... 2Q, Up 6.5% YoY

Impact of Consumer Price Inflation... Processed Food Prices Rise 7.6%, Standing Out
Top Actual Price Increases Concentrated in Flour, Cooking Oil, Ramen, and More

[Asia Economy Reporter Koo Eun-mo] The burden of food expenses on households is rapidly increasing amid the continuous rise in consumer prices. In particular, due to the Russia-Ukraine war and other factors causing raw material prices to rise along with exchange rate pressures, price hikes in processed foods such as flour, edible oils, and ramen, which use these as main ingredients, are becoming prominent.

According to Statistics Korea on the 22nd, the average monthly food expenditure per household (including dining out and alcoholic beverages) in the second quarter of this year was 768,000 KRW, up 6.5% from 721,000 KRW in the same period last year, and increased by 6.2% compared to the first quarter.

The increase in household food expenditure is due to a significant rise in the food consumer price index, especially the price hike in processed foods. When food expenses were classified into agricultural, livestock, and fishery products, processed foods, and dining out to check the price indices, the processed food price index in the second quarter rose 7.6% compared to the same period last year. This is attributed to raw material price increases and base interest rate hikes since the beginning of the year. During the same period, the dining-out price index also rose sharply by 7.3%. In contrast, agricultural, livestock, and fishery products increased by 3.6%, showing a relatively lower rate of increase. The rise in agricultural, livestock, and fishery products has gradually eased since last year.

As processed food prices rose significantly, the cost spent on most processed foods also increased. Notably, edible oils rose by 72.0%, and alcoholic beverages (27.8%), other foods (26.6%), and grain-processed products (24.3%) also saw large increases, reflecting household eating habits and the trend of increased drinking at home.

The top five items with the highest average monthly household expenditure in the second quarter were bread and other bakery products (18,243 KRW), Hangwa and other snacks (13,730 KRW), other processed meat products (10,358 KRW), instant frozen foods (9,971 KRW), and milk (9,381 KRW). Among these, bread and other bakery products and Hangwa and other snacks increased by 8.9% and 2.8%, respectively, compared to the same period last year, highlighting the notable price hikes in flour products.

In fact, the items with the largest price increases in the second quarter were concentrated on flour and cooking oils. According to the Korea Consumer Organization's Price Monitoring Center, Daehan Flour's 'Gompyo Flour Medium Gluten (Multipurpose)' rose the most at 34.4%. This was followed by CJ CheilJedang's 'Baeksul Flour Medium Gluten (Multipurpose)' at 28.5%, Ottogi's '100% Soybean Cooking Oil' at 27.7%, and CJ CheilJedang's 'Baeksul 100% Soybean Oil' at 26.0%.

This trend continued into the third quarter, with the top five items with the highest price increases being flour (42.7%), cooking oil (32.8%), sugar (20.9%), cola (14.6%), and fish cake (14.6%). The average increase rate for these items was as high as 25.1%. The sharp rise in flour and cooking oil prices is attributed to raw material supply instability caused by the Russia-Ukraine war and the rise in the won-dollar exchange rate.

As prices of flour and cooking oil rise, price hikes for representative processed foods like ramen are also following suit. Nongshim raised the shipment prices of major ramen products such as Shin Ramyun by an average of 11.3% last month, signaling the start of price increases. This month, Paldo also raised ramen prices, including Wang Ttukbaegi, by an average of 9.8%. Ottogi likewise increased ramen product prices by an average of 11.0% starting from the 10th of this month based on shipment prices.

The Consumer Organization Council stated, "Flour, cooking oil, and sugar greatly affect perceived inflation and even impact dining-out prices, but their prices continue to rise," adding, "We hope a culture of mutual growth will be established where companies promise and implement price reductions when raw material prices fall."

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