Soaring food prices alarm Lee administration

Shoppers check produce at a supermarket in Seoul, Sunday. Yonhap

Soaring food prices in Korea have become a major news focus, with data indicating that the country has been experiencing persistent inflation for several years. The trend is triggering calls for stronger government action to bring prices under control.

President Lee Jae-myung raised a question during a cabinet meeting last week about the current market price of a packet of instant noodles, which he apparently thought too high. Lee, elected earlier this month to replace impeached President Yoon Suk Yeol, has designated controlling food prices as one of the most urgent national issues.

Consumers’ purchasing power in Korea is among the worst in the world, according to the Organization for Economic Cooperation and Development (OECD) on Sunday.

Based on prices from 2023, the OECD calculated the country’s purchasing power parity (PPP), analyzing rates of currency conversion to estimate the purchasing power of different currencies.

The OECD said Korea’s PPP on foods and nonalcoholic beverages was 147, 47 percent higher than average for the organization’s 38 member countries. The figure was second-highest, behind Switzerland's 163. This means that prices of food and beverage products are more expensive in Korea than in 36 OECD countries.

The United States had a PPP of 94, with Japan at 126, the United Kingdom 89 and Germany 107, meaning local food prices in these countries were all more affordable than Korea.

Market prices of clothing, shoes and education fees in Korea were also higher than the OECD average.

In contrast, Korea had below-average PPP for public transit, culture and leisure, dining and housing among the same group. In the Household Final Consumption category, Korea’s PPP of 85 was also below average. This means that while general household expenditures are lower than in other countries, OECD data shows that essential items like foods and clothing in Korea were relatively more expensive.

The country's rising food prices have also been evident in Korean government data.

According to Statistics Korea, which periodically releases consumer price indices, the figure in the first quarter of this year was a 16 percent accumulative increase from 2020. When the scope was narrowed to food items, the figure jumped to 25 percent. Among the 144 most popular consumer products in the country, the figure came to 19 percent, showing the most popular and essential products increased in price.

Lee repeatedly highlighted market price controls as a key task in meetings with ministers. Acting Minister of Economy and Finance Lee Hyoung-il presided over a vice ministerial meeting on consumer prices at Government Complex Seoul on Thursday, referring to the task as the government’s “top priority.”

The ministry said it will roll out countermeasures shortly, including lowering prices for eggs and processed food products by urging supermarkets to host discount events. They added that they will release government-held supplies to meet consumer demand for agricultural products.

As the government ramps up pressure to curb soaring food prices, the food industry is crying foul, saying that it is being "unfairly blamed" for driving inflation.

On Friday, the heads of Korea's leading food industry associations met with Kim Min-seok, the nominee for prime minister, and explained that recent price hikes were the result of worsening economic conditions, including currency volatility and rising ingredient costs.

They also stressed that despite ongoing cost pressures, they have made efforts to hold off on price increases, in line with the government’s price stabilization policy.

Participants also claimed that food delivery platforms are taking excessive profits, according to the Prime Minister's Office.

Amid this blame-shifting, calls are growing for the government to shift its focus from price intervention to providing more support for the food industry.

"The days when the government could simply curb prices through regulations are over," Kim said. "I believe the government, industry and other stakeholders need to explore ways to cooperate from the beginning."