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[Journalism Internship] Bread inflation: Prices rise as the won falls

Published: 31 Dec. 2025, 16:17

Bread is displayed at a bakery in Korea. [NEWS1]

Chang Eun-seong, Chang Yu-nu, Andrew Kim, Moon Ji-yoo

Demand for bread has peaked with the upcoming holiday season as the cost of imported ingredients such as flour and sugar increases amid the weakening won.

Experts say the upward trend is likely to continue into the new year, driven by inflationary concerns stemming from the weak local currency, which has persisted in recent months as it approaches the 1,500-to-the-dollar threshold.

The already-present crisis of bread costs

Without even considering inflation, Korean bread prices are steep. According to Numbeo, an online database, the price of bread in Korea tops the charts in Asia and is ranked 10th in the world.

Korea’s obsession with nontraditional, pastry-like bread deepens the burden. Things like sausage rolls or red bean paste butter bread require supplemental ingredients in addition to traditional ingredients like flour. More ingredients drive up the retail cost.

The fact that bread is not native to Korea is also a factor driving costs up. Although there have been many attempts to change this, the majority of bread ingredients, like flour and sugar, are still produced outside of Korea.

Importing is a necessity to bake bread, but the problem lies in the fact that importing is dependent on exchange rates. The stronger a currency is, the cheaper it is for owners of that currency to trade with other countries, and vice versa.

For the last few years, though, the won has been experiencing a severe decline. With the won-to-dollar rate approaching an astoundingly high 1,500, importing goods is becoming more expensive than ever. Charts suggest a further depreciating won and for that, compared to Korea-produced ones, the cost of import-dependent commodities like ingredients for bread is bound to be on the rise. This directly impacts the cost of baking bread, which trickles down directly to Korean consumers.

In addition, a deeper structural problem is intensifying bread’s ingredient inflation: extreme market concentration. Data submitted to the Fair Trade Commission for a National Assembly audit show that Korea’s flour, sugar and bread industries are dominated by the top three companies, reportedly controlling up to 94.5 percent of the market.

This level of concentration far exceeds what is typically seen in competitive food markets and grants these firms substantial power to influence prices. In such an oligopolistic environment, rising production costs are not merely passed on to consumers but can also be amplified.

Even without explicit collusion, the market structure itself allows prices to increase more easily and remain elevated over time, ultimately weakening consumer protection.

Holiday season: Why does it amplify bread inflation?

With the end of the year, many people are trying to buy cakes for Christmas and New Year's. This is because during holidays, cakes are bought for small celebrations and luxury.

Twosome Place announced on Dec. 22 that cake demand and reservations for cakes had increased four times compared to last year. This shows that demand for cakes will increase.

Many households order and buy cakes from local bakeries for celebrations. However, because the bakeries have increased the prices of cakes and other bread products due to the increasing cost of materials, families often feel pressure when purchasing cakes.

Bakeries must balance customer expectations and demands with financial limits, which makes the products expensive. Because of the increase, the Shinhwa world holiday cake is currently sold for 500,000 won.

Despite these challenges, people continue buying cakes because they feel buying cakes for holidays is important. As many people believe this, the costs of overall bakery products show a definite increase, not only because the materials have been increasing but also because of the high demand from customers during the holidays, and the bakeries need to make as much as they can to fulfill all of the customers' demands.

BY CHANG EUN-SEONG, CHANG YU-NU, ANDREW KIM, MOON JI-YOO [[email protected], [email protected], [email protected], [email protected]]