The consumer price increase rate has remained stable at around 2% for three consecutive months, but the perceived level of prices remains high. Food companies have raised the prices of processed foods since the beginning of the year, and prices of some vegetables, seafood, and dining out have soared, keeping price authorities on high alert. Additionally, significant wildfires have occurred, particularly in the Gyeongbuk region, raising concerns about future food prices.
The government plans to make every effort to stabilize prices, acknowledging that uncertainties remain due to future weather conditions and geopolitical factors. It also aims to swiftly investigate damages to agricultural and livestock products caused by the wildfires and to analyze supply impacts, responding in a timely manner.
◇ Prices of processed foods, dining out, and tuition have increased consecutively
According to the Consumer Price Trend for March 2025 released by Statistics Korea on the 2nd, prices of processed foods last month rose by 3.6% compared to the same month last year, exceeding the overall consumer price index increase rate of 2.1%. This marks the highest level in 15 months since December 2023 (4.2%). The price increases were significant for items like coffee (8.3%) and bread (6.3%), which experienced rising materials and supplies costs.
Since the beginning of this year, more than 40 processed food companies have reportedly raised their prices. The list of items with increased prices includes coffee, chocolate, bread, cake, ramen, ice cream, dumplings, hamburgers, beer, and cheese, making it difficult to count them all. Companies cited reasons for the price increases such as ▲ rising prices of food materials and supplies like palm oil, cocoa, and coffee due to supply chain instability and abnormal weather ▲ increased industrial electricity costs ▲ rising labor costs and exchange rates.
Statistics Korea noted that "there are also food companies that have announced plans to raise prices in April, suggesting that the impact of price increases is expected to be reflected over the coming months."
Last month, agricultural product prices fell by 1.1% compared to the same month last year, but seafood prices rose significantly by 3.6% compared to the previous year. The price increase rate for seaweed, which continues to be popular globally with ongoing exports, recorded 32.8% compared to the same month last year. Prices of mackerel (7.8%), dried squid (6.6%), and hairtail (5.5%) also increased significantly compared to the same month last year due to decreased catch caused by abnormal weather.
The price of vegetables rose by only 1.8% compared to the same month last year, but prices of commonly purchased items such as radishes (86.4%), napa cabbage (49.7%), and onions (26.9%) increased significantly, increasing the burden on consumers. The government supplied 100 tons of napa cabbage daily to the market last month, but this was insufficient to prevent soaring prices due to poor harvests.
The increase in dining out prices (3.0%) is also notable. Prices of popular dining items such as tteokbokki (5.8%), sashimi (5.4%), chicken (5.3%), and gimbap (5.0%) rose significantly compared to the same month last year.
Given the situation, even though the overall consumer price increase rate recorded around 2% for three consecutive months compared to the same month last year, many citizens feel a sense of disconnection. Kim Min-a (34), who works in Jung-gu, Seoul, said, "With the costs of lunch, coffee, and delivery all rising, there's been a trend of people bringing packed lunches to work," adding, "In the evenings, we mostly eat home-cooked meals." Office worker Kim Da-min (31) also expressed, "Even at cafes, a piece of cake costs 10,000 won, which is surprising," stating, "It's said that prices are stable, but it's hard to feel that way."
In addition, more than half of private universities have raised tuition fees, adding to the financial burden on students and their families. Last month, tuition fees for private universities rose by 5.2% compared to the same month last year.
◇ Large-scale wildfires negatively impact agricultural product prices… government says it will respond swiftly after assessing the damage
The large-scale wildfires that occurred in the Gyeongbuk region last month are expected to negatively affect agricultural product prices in the future. The Korea Price Association projected that "(due to the impact of the wildfires), the upward trend in prices due to unstable supply is likely to continue for some time."
From the 21st to the 30th of last month, wildfires in 11 regions resulted in the destruction of 1,490 hectares of orchards in Gyeongbuk, an area five times the size of Yeouido, and 56 hectares of other crops disappeared. The wildfire-affected areas are major production sites for spring napa cabbage, garlic, dried red chili peppers, apples, and plums, which are expected to impact agricultural product prices in the future.
Warnings continue that disasters, including the wildfires, will affect inflation as well as households and corporations. Global investment bank Morgan Stanley estimated that "the impact of the wildfires that occurred in L.A. in January contributed 0.04 to 0.09 percentage points to the core consumer price index increase rate in January." Lee Chang-yong, Governor of the Bank of Korea, also warned that "if large-scale damage is concentrated in specific areas due to climate change, the losses for households and corporations could lead to the consolidation of financial institutions connected to them."
The government also reports that some items could be affected and plans to quickly investigate damages and analyze the impacts. Choi Sang-mok, Deputy Prime Minister and Minister of Economy and Finance, stated at a meeting of economic relations ministers that "we will promptly inject resources to minimize the impact on agricultural product supply and prices caused by the wildfires and support affected farming households."
The government plans to provide disaster recovery expenses and disaster support funds for crops and livestock immediately after the damage investigation is completed. If affected farming households wish, disaster insurance payments will be made up to 50% in advance. The government intends to carefully assess the scale of damages and consider additional financial input for support regarding the stability of agricultural product supply.