This February South Korea saw the steepest increase in the fresh food price index since 2013- 9.7 percent. Overall consumer price gains have remained low, around 1 percent for a year and a half, and the country's low inflation rate is also hiding the problem, but consumers are feeling the effects on their household budgets.
Prices for some staples are skyrocketing. The average cost of onions doubled from a year earlier and napa cabbage jumped 66 percent, according to data from Korea Agro Fisheries & Food Trade Corp. In a few months, the higher cabbage prices may mean more expensive Kimchi, which is almost guaranteed to upset consumers.
The most recent surge in fresh food prices, which is partly due to colder weather and snow over winter, may last a couple of months, according to the government. It comes after a drought hurt agricultural output in the summer. Cheaper oil is one area of respite for households, and is the biggest contributor to the weakness in the inflation gauge.
“Spending is already weak in Korea and the sluggishness could spread if consumers feel that some prices are rising fast,” said Lim Hee Jung, a research fellow for Hyundai Research Institute in Seoul.
With export earnings falling, the economy can’t afford a further drop off in demand at home.
The gap between the benchmark price gauge and what’s seen at the supermarket checkout hasn’t gone unnoticed. The statistics office is examining the 481 items that comprise the CPI basket to determine changes to better reflect overall price movements.
