Heeding price hikes

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Heeding price hikes

Grocery prices have shot up, making life tough for the working class struggling under heavy debt and stagnant income. Leading ramen maker Nongshim announced an average 5.5. percent hike in shelf prices for all its products starting this week. It raised prices for the first time in five years due to higher costs in labor and logistics. Paris Baguette, one of the biggest bakery chains in Korea, raised prices of its supplies by 6.6 percent on average earlier this month. Beer, soju, beverages, tofu, snacks and ice cream prices have all gone up. Egg prices are also rising as a result of the avian influenza outbreak. If the bird flu crisis worsens, prices of all foods that use egg as an ingredient could shoot up.

Many had worried about signs of deflation. Consumer prices in November gained 1.3 percent year on year. Inflation has recovered to above 1 percent from September, but is still far below the Bank of Korea’s 2 percent target. A steady rise in consumer prices would help the economy. But the problem is that daily living prices are rising while income stays stagnant. Gross national income fell 0.4 percent respectively in the second and third quarter. The consecutive two-quarter contraction has happened for the first time since the 2008 financial crisis. Moreover, our economy is estimated to grow zero percent in the fourth quarter and likely stay sluggish in the first quarter next year. Due to a rebound in international oil prices and the U.S. dollar, inflationary pressure could grow. Korean households could be faced with stagflation where prices go high amid stagnant income and growth.

The national statistics office revised the consumer price index for the first time in five years, however, not heeding the current price movements and economic circumstances. The weighted consumer prices for the first 11 months will go down under the new guidelines.

Prices of ketchup and mackerel pike were excluded, while blueberries and phone repair costs newly joined the survey list. Mackerel pike prices are ready to go up by 20 percent. Public life will become tougher. The government should re-examine whether its new consumer price survey keeps abreast of the conditions of the times and also prevent producers from raising prices during political turbulence.

JoongAng Ilbo, Dec. 19, Page 34
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