Even ‘good’ companies rush to lift prices

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Even ‘good’ companies rush to lift prices

The author is a deputy editor of industry news at the JoongAng Ilbo.

A food industry insider I met recently sighed, saying, “I didn’t expect this from the Yoon Suk-yeol administration, which emphasizes freedom. The deputy prime minister for economic affairs also warned companies openly.” He was referring to the remarks by Deputy Prime Minister Choo Kyung-ho last month, as he requested that the processed food industry minimize price hikes at a meeting. Choo’s threat to monitor the food industry trend on a daily basis and aggressively push “consultations for price stability” put pressure on the industry.

Another industry insider shared in the bitter feelings. “We’ve been trying to cut costs amid rising raw material prices and the exchange rate, but the government does not accept the food industry as an economic player enduring the pain of inflation,” he said.

From consumers’ point of view, the government said what it should, as the government does not welcome companies raising prices two to three times over a year. But you must not ignore the fact that there are valid reasons for raising prices. An industry insider even explained that the food industry had to hastily raise prices before October after the government’s prediction that prices will reach a peak that month. If his words are true, it’s a comedy.

Even without government intervention, most companies are conscious of consumers. Ottogi is known as a good company for its exceptionally low proportion of non-regular employees. While distributing a press release about a plan to increase prices of its products, the company mentioned three competitors by name. Ottogi has made the fewest number of price increases — twice — since 2008, whereas its competitors did three to four times. The food industry usually avoids mentioning the names of rivals, but Ottogi openly mentioned them, probably in an attempt to defend its good image.

Orion, which has been praised for refraining from price increases, also lifted prices for the first time in nine years. The company underscored that it would increase product volume or lower prices when the price of ingredients and energy costs stabilize. Such price hikes by so-called good companies shows that it is difficult to overcome high prices and high exchange rates. We hope the government focuses on taming the fluctuating exchange rates to help stabilize rapidly rising prices before it is too late.
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