Food, non-alcoholic drink prices are out of control
Food prices are driving inflation in Korea.
According to data provided by the Organization for Economic Co-operation and Development (OECD) on Saturday, the price of food and non-alcoholic beverages rose by 5 percent on-year during the third quarter in Korea, putting the country fifth among 38 OECD countries in terms of the rate of food price growth.
Turkey showed the steepest growth at 27.6 percent, followed by Colombia, Australia and Mexico. Chile tied with Korea sharing 5 percent growth rates.
Korea's overall consumer prices rose by 2.6 percent during the July-September period, which is the fastest growth since the first quarter of 2012, when prices rose 3 percent.
Still, its ranking for overall inflation was 23rd among OECD countries, showing price growth for food and non-alcoholic beverages was relatively stronger in Korea than in other countries.
According to an OECD report published on Dec. 1, Korea ranked relatively low on the worldwide inflation ranking.
“The [global economic] rebound is losing some momentum as the surge in demand for goods has met bottlenecks in production chains,” read the report.
The OECD cited disruptions in energy, food and commodity markets, high energy prices and fuel shortages and bottlenecks in production chains as the main factors causing global inflation.
“The renewed inflationary pressures risks [are] lasting longer than was expected a few months ago,” read the report. "Rising food and energy prices are hitting low-income households in particular."
Korea’s food and non-alcoholic beverage prices have been rising since the first quarter of last year. They rose by 1.7 percent in the first quarter of 2020 on year and hit 8.2 percent in the first quarter of this year, the highest since the third quarter of 2011.
Increases in food and non-alcoholic beverages prices impact consumers directly. There are limits to how much a household can cut spending on those items.
According to Statistics Korea, the items that saw the steepest increases last quarter were eggs, whose prices skyrocketed by 51.6 percent, followed by pears (45.2 percent), apples (34.6 percent) and garlic (28.1 percent). Prices of pork, spinach, mushrooms, chicken, beef and processed meat such as ham also rose.
The increases are expected to continue into the fourth quarter, according to the Bank of Korea (BOK) on Friday.
“We had expected the consumer price increase in November to exceed that of October, but it did so by much more than we anticipated,” the BOK said in a report.
“We expect inflation rates to exceed our forecasts for quite some time due to inflationary pressures increasing and bottlenecks in supply chains.”
Finance Minister Hong Nam-ki, however, pledged that consumer prices will stabilize this month.
“In December, international crude price will stabilize and [government] fuel tax cuts will have an effect, slowing the growth [of consumer prices],” Hong said during a government meeting last Thursday.
BY YOON SO-YEON [email@example.com]
with the Korea JoongAng Daily
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