Inflation flat? Most consumers aren’t buying it

More than nine in 10 consumers think prices have increased more than the official inflation rate, and men say they plan to reduce leisure and entertainment spending, while women plan to cut back on clothes.

According to a survey of 500 people released Monday by the Korea Chamber of Commerce and Industry (KCCI), 95 percent believe prices have risen more than inflation and 86.8 percent said they will reduce their spending.

Food and beverage prices were cited by 86.6 percent of those surveyed and clothes by 3.6 percent, computers and IT products by 2.6 percent and shoes and bags by 1.8 percent.

“Although the recent inflation reports indicate price stability, there are many consumers who feel prices have gone up, especially fresh produce, which is consumed almost every day,” said the KCCI.

Among men who said they will cut back, 53 percent mentioned entertainment, hobbies and sports goods, 45.6 percent clothes and 44.2 percent food and beverages.

Of women, 55.8 percent said they will reduce spending on clothes, 37.3 percent on food and beverages, 33.6 percent on entertainment, hobbies and sports goods and 23 percent on cosmetics.

Of those surveyed, 41.2 percent said they will reduce the number of purchases, followed by 24.5 percent who said they will buy the same number of items but shop for the lowest price. Fourteen percent said they will purchase generic brands when possible, and 13.6 percent indicated they will stop nonessential purchases altogether.

The survey also shows a growing interest in private brand goods, also known as PB products or store brands; 46.8 percent have been buying PB products, which are usually cheaper, at discount chains and 49.4 percent have taken advantage of more discount promotions compared to a year ago.

When asked about how they would stabilize prices, 35.6 percent chose promoting efficiencies in the distribution system, 19 percent said monitoring unfair price hikes, 17.4 percent picked freezing utility bills and 10.8 percent proposed promoting competition.

“Rising prices of fresh produce are causing consumption of other consumer goods to shrink. It is urgent to improve fresh food production and distribution,” said Kim Kyung-jong, president of GS1 Korea, a nonprofit organization under the KCCI dedicated to improving supply chain management. “Also, at a time of shrinking consumption, it is important to supply low-price products that meet consumer needs through close cooperation between the retail and manufacturing sectors.”

By Kim Jung-yoon [kjy@joongang.co.kr]