Consumer price inflation has remained stable at around 2% for four consecutive months, but food prices show no signs of declining. Prices for livestock, seafood, processed food, and dining out have continued to rise significantly compared to the same month last year.
According to the ‘April Consumer Price Trends’ announced by the Statistics Korea on 2nd, the consumer price inflation rate last month (compared to the same month last year) was 2.1%, showing a stable trend. However, excluding agricultural products that experienced a significant price increase last year due to base effects, the majority of food prices are still rising. Although the government is implementing discount support for agricultural, livestock, and fisheries products, and applying quota tariffs, it remains uncertain whether these measures will be effective.
◇ Climate change and 'fishflation'… prices for livestock, processed foods, and dining out are also on the rise
Last month, seafood prices rose 6.4% compared to the same month last year, marking the highest level in 25 months. Specifically, the price of mackerel, which is the most preferred seafood by the public, increased by 11.6% compared to the same month last year, while the prices of hairtail, squid, and dried squid rose by 6%, 3%, and 7.1%, respectively. The prices of most seafood, including seaweed (25.5%), shrimp (9.5%), croaker (4.9%), and pollock (4.6%), significantly increased compared to one year ago. As a result, there are voices expressing concern about the burden of using seafood as side dishes or drinking snacks.
The increase in seafood prices is due to decreased catch volumes caused by high temperatures resulting from global warming. According to the Statistics Korea, the production volume of coastal fisheries, including anchovy, mackerel, and hairtail, decreased by 11.6% from the previous year to 841,000 tons, which is the lowest figure in 53 years since 1971 (760,400 tons). Compared to the 1980s (1.51 million tons), it has halved.
This year is not expected to improve significantly either. The ongoing possibility of ‘fishflation’ (a merger of seafood and inflation) due to abnormal weather is concerning.
Choi Yong-seok, director of the National Institute of Fisheries Science, analyzed, “The rise in sea temperatures in our waters over the past 57 years (1.58℃) is double that of the global average (0.74℃),” noting that “climate change is progressing more rapidly and seriously than expected across our seas and the fisheries industry.” The National Institute of Fisheries Science previously projected that “seaweed like kelp and sea mustard, as well as sea cucumbers, may become difficult to find in our waters.”
Last month, livestock prices also rose by 4.6% compared to the same month last year. The increases in the prices of imported beef and pork, along with rising egg prices, have impacted this. The government has decided to apply quota tariffs to imported pork and processed eggs beginning this month, but the effectiveness of these measures remains uncertain.
Processed food and dining costs also increased by 4.1% and 3.2%, respectively, compared to the same month last year. The high exchange rate, labor costs, and rising prices of imported raw materials have all contributed to these increases. Moreover, price hikes for beverages, convenience meals, and daily necessities are continuing this month, so the burden of processed food and dining costs is likely to persist in the near future.
◇ Concerns about a decline in consumer sentiment, but no economic control tower
The rising prices of daily necessities and food can lead to weakened consumer sentiment and sluggish domestic demand. Consumer sentiment has remained below 100 for five consecutive months since recording 88.2 in December last year.
Despite this situation, the absence of an economic control tower is likely to make price stabilization even more difficult. Choi Sang-mok, the former Minister of Economy and Finance, announced his resignation the day before, and Kim Bum-seok, the first Vice Minister of Economy and Finance, is now serving as the acting Minister starting today. Consequently, the price vice ministerial meeting that was scheduled to be chaired by Kim this morning was also canceled.
A Ministry of Economy and Finance official explained regarding the future of the price vice ministerial meeting, “The response to price issues is being handled collaboratively by relevant ministries, and practical meetings will continue to be held,” adding that “the price vice ministerial meeting will be held in accordance with the schedule of Minister Kim Bum-seok’s acting role.”
Meanwhile, the government plans to do its best to stabilize the perceived cost of living in conjunction with relevant ministries. It has secured a budget of 170 billion won through supplementary budget measures to support discounts on agricultural, livestock, and fisheries products.
The Ministry of Economy and Finance stated, “We will continuously monitor the supply, demand, price fluctuations, and distribution status of major items closely related to people’s livelihoods such as agricultural, livestock, and oil products, and will quickly prepare response measures if necessary.”