Minimum wage pushes prices

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Minimum wage pushes prices

The higher minimum wage adopted this year is forcing businesses dependent on part-time workers like fast food chains and convenience stores to jack up prices.

This trend has even spilled over to retail businesses of big companies that were reluctant to raise prices on goods such as soft drinks.

The minimum wage jumped from 6,470 won ($5.99) per hour last year to 7,530 won this year as part of the Moon Jae-in administration’s initiative to improve working conditions for Koreans.

Some franchise operators preemptively raised prices as soon as the government signaled the adjustment last year.

Fast food franchise KFC raised the price of its chicken and burgers by up to 7 percent last year. Coffee Bean raised the price of its coffee by 7 percent last month. McDonald’s raised the price of some items and sets by up to 300 won last month.

Franchises affiliated with conglomerates have also recently raised prices.

CJ CheilJedang, the processed food maker affiliated with CJ Group, said it raised the price of flagship products such as Hetbahn (ready-made rice), Spam and Bibigo (frozen dumplings) by up to 9 percent from March 1.

“A continuous hike in various elements of our cost structure has led us to increase prices,” said a CJ CheilJedang official. “As a matter of fact, a two-digit hike was inevitable. However, in order to minimize the impact on customers, we decided to keep it at single-digit.”

Hetbahn products will rise to 1,500 won from the previous 1,400 won starting in March. A can of Spam will rise to 5,880 won, a 7.3 percent hike, from the previous 5,480 won.

Frozen Bibigo dumplings will be sold for 7,980 won from the previous 7,480 won.

Burger King has decided to raise prices on 12 items by 100 won from March 2. Burgers such as Whoppers, Cheese Whoppers, Bulgogi Whoppers, Chicken Tenders and Coconut Shrimp will be affected too.

Convenience stores, which are most vulnerable to minimum wage hikes, have also raised prices.

GS25, an affiliate of GS Retail, has increased the price of some 60 in-house items in the non-food sector such as tissues, wooden chopsticks and hair bands. The affected products’ prices went up by an average of 100 to 200 won.

A GS25 official said the hikes were inevitable.

Other industry players such as CU and 7-Eleven haven’t yet announced plans to raise the price of products that are not related to food.

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