Food companies ready for post-election hikesMajor food companies are planning a series of price hikes after the presidential election that will affect commonly purchased items like tofu, bean sprouts and flour as the firms expect political pressure to lessen after Election Day.
During the current Lee Myung-bak administration, food companies’ ability to raise prices has been restricted as price stabilization has been a key presidential policy. But with the soaring prices of raw materials and rising inflation, a rise in prices is long overdue.
The food companies believed that the end of the presidential election would be the perfect time for the hike.
According to the retail industry yesterday, the country’s biggest food company CJ CheilJedang informed large discount stores earlier this month that it would increase prices of 22 processed food products 8 to 10 percent.
Negotiations between CJ CheilJedang and large discount store chains are currently underway.
Following CJ CheilJedang’s announcement, another food company Pulmuone has already increased the prices of its tofu products by 7 to 8 percent and bean sprout products by 9 to 10 percent.
Pulmuone is reportedly planning to expand the number of stores to apply the same price hike to all retail stores including large discount stores as soon as the presidential election ends.
The milling industry is also waiting until the end of the presidential election to jack up prices by about 9 percent, a move it sees as inevitable given the high prices of raw materials.
“Since we are using expensive raw materials as the stockpiled inventory ran out, we are selling the products at prices below the cost of production,” said a milling industry insider.
A price hike for soju is also expected as the price of the main source went up by 5.6 percent for the first time since December 2008.
Hite Jinro, the country’s second largest liquor company, said it has no plans to raise the price, but small soju companies may have no choice.
Beer prices have soared already. The No. 1 beer company Oriental Brewery raised the retail price of its beer products by 5.89 percent in August and Hite Jinro increased the prices of its beer products by 5.93 percent in July.
By Kim Jung-yoon [firstname.lastname@example.org]