Monthly Food Expenses Near 900,000 Won... "Chilling Dining-Out Costs, Increase in Home Meal Eaters"

Last Year's Q3 Average Monthly Food Expense per Household 870,000 KRW... 5% Increase YoY
Food Prices Rose Over 6% While Income Increased Slightly by 1.2% Last Year

#Office worker Moon-gyu Lee (37) has recently improved his cooking skills significantly. This is because he has been preparing and eating dinner at home more often after work. Until a few months ago, Lee, who works with his spouse, often met his wife near their home on the way back from work to dine out or relied on takeout for dinner. However, as dining-out prices have been rising rapidly day by day, a crisis was sensed in managing the household budget.

He said, “At some point, I thought this can’t go on,” and added, “My wife and I agreed that even though it’s inconvenient, we should increase the frequency of cooking at home.” Lee said, “Although the cost of ingredients is not cheap, cooking for two has definitely reduced our overall food expenses,” and “There is also the advantage of eating a bit healthier, so I plan to increase the number of times I cook at home in the future.”

The average monthly household food expenditure has reached an all-time high, increasing the burden of food prices on ordinary citizens. While income growth has stagnated, food prices continue to soar daily. In particular, as dining-out costs rise sharply, the number of 'home meal' households who buy ingredients and cook their own meals is increasing.

Amid High Inflation, Monthly Food Expenses per Household Reach 870,000 KRW... "All-Time High"

According to the National Statistical Portal of Statistics Korea on the 4th, the nominal food expenditure per household (including single-person households) in South Korea in the third quarter of last year was an average of 870,198 KRW per month. This is a record high, surpassing the 832,000 KRW spent in the third quarter of 2022, representing a 9.0% increase compared to the previous quarter and a 4.5% increase compared to the same period a year earlier. The average monthly food expenditure per household has been steadily increasing since 2019.

Excluding the effects of price fluctuations, the real food expenditure per household in the third quarter of last year was 736,026 KRW, a 7.1% increase compared to the second quarter. Lee Gye-im, a researcher at the Korea Rural Economic Institute, explained, “The nominal and real food expenditures per household showed similar trends from the first quarter of 2019 to the first quarter of 2021, but the gap has gradually widened since then,” adding, “This is because the food consumer price index has continuously increased from the first quarter of 2021 through 2023.”

While the pace of price increases is steep, income growth has lagged far behind, rapidly increasing the burden of food expenses on households. Last year, the processed food price inflation rate, a representative indicator of consumer food prices, was 6.8%, 1.9 times higher than the overall inflation rate of 3.6%, and the dining-out price inflation rate was 6.0%, 1.7 times higher. This means that the burden of food prices, including processed foods and dining out, was significantly greater than for other items. Although the price inflation rate for agricultural, livestock, and fishery products was relatively low at 3.1%, the fruit price inflation rate was high at 9.6%.

Compared to the high food price inflation rate, income increased only slightly. From the first to the third quarter of last year, the average disposable income of all households was 3,931,000 KRW, a 1.2% increase compared to the same period the previous year. Although the fourth quarter income remains, the growth rate is not expected to differ significantly. Disposable income refers to the amount of money available for consumption or savings after deducting interest and taxes from total income.

The burden of increased food expenses due to inflation was felt more heavily by low-income groups. In the third quarter of last year, real food expenditure increased across all income quintiles compared to the second quarter, but for the first quintile, it rose by 12.4%, and for the second quintile by 11.5%, indicating that households in the lower-income brackets experienced a relatively larger increase in real food expenditure compared to the fourth quintile (3.6%) and fifth quintile (6.7%).

Thinner Wallets... Home Meals Over Dining Out

As food price inflation increases the burden of food expenses, the tendency to purchase ingredients and cook at home rather than dining out is becoming stronger. When examining real expenditures by dividing food expenses into fresh foods (agricultural, livestock, and fishery products), processed foods, and dining out, the average monthly expenditure on fresh foods in the third quarter of last year increased by 3.7% compared to the same period the previous year, and processed foods maintained a similar level, but dining-out expenditure decreased by 2.1%. This is interpreted as the post-COVID era initially showing an increase in dining-out consumption, but from last year, as price burdens intensified, dining-out consumption decreased while home consumption (fresh and processed foods) increased.

In fact, dining establishments raised prices throughout last year, increasing consumers’ dining-out expenses. For example, bhc raised the price of its representative menu, chicken, by around 3,000 KRW starting from the 29th of last month, pushing the prices of major brands’ products into the 20,000 KRW range. Earlier, BBQ raised prices by 2,000 KRW for all items in May 2022, and Kyochon Chicken also raised prices by up to 3,000 KRW per item in April last year.

The hamburger industry also saw price increases last year. McDonald’s raised prices of some products by an average of 5.4% in February and again increased prices of 13 menu items, including four burgers and one McMorning menu, by an average of about 3.7% in November. Shinsegae Food’s No Brand Burger raised burger menu prices by an average of 4.8%, KFC increased burger and chicken product prices by about 100 to 200 KRW, Lotteria also raised prices of items like Bulgogi Burger by an average of 5.1%, and Mom’s Touch raised prices of 43 products by an average of 5.7%.

Besides franchise dining items, representative affordable menus are no exception. According to the Korea Consumer Agency’s Price Information Portal, the price of one serving of jajangmyeon in Seoul rose from 6,569 KRW at the end of 2022 to 7,069 KRW in November last year, a 7.6% increase. During the same period, bibimbap increased from 9,923 KRW to 10,577 KRW, a 6.6% rise, and gimbap rose from 3,100 KRW to 3,292 KRW, a 6.2% increase.

Researcher Sang-hoon Jo of Shinhan Investment Corp. said, “Although the dining-out industry rebounded with the COVID-19 endemic in 2022, demand decreased last year due to the rapid rise in dining-out prices,” and predicted, “As domestic consumption slows and dining-out prices rise sharply, home meal demand is expected to increase inversely to the sluggish dining-out market for the time being.”

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