Due to President Donald Trump's erratic tariff policy, financial markets are unstable, and the won-dollar exchange rate is fluctuating, causing concerns in the domestic food and dining industry. Recently, the industry has raised prices repeatedly due to rising costs, and the exchange rate is acting as another negative factor. It is expected that until the presidential election in June, the domestic political situation will remain unstable, increasing pressure for price hikes.
According to related industries on the 11th, the won-dollar exchange rate in the Seoul foreign exchange market closed at 1,456.4 won, down 27.7 won from the previous trading day. The won-dollar exchange rate has been experiencing volatility following announcements related to tariffs by President Donald Trump. At one point, the won-dollar exchange rate reached 1,484.10 won, the highest level since it recorded 1,492 won during the financial crisis on March 16, 2019. Following President Trump's announcement of a 90-day tariff exemption for countries other than China, the won-dollar exchange rate fell again.
However, the market predicts that if conflicts between the United States and China continue, the exchange rate could exceed 1,500 won. Baek Seok-hyun, chief economist at Shinhan Bank, noted in a report titled "2025 Economic and Foreign Exchange Market Outlook Update" that "until news of a tariff agreement or a shift to dialogue mode between the U.S. and China emerges, the upper limit for the exchange rate is open, making 1,500 won possible." He presented a forecast range for the second quarter for the won-dollar exchange rate of 1,430 to 1,500 won.
The food and dining industry is already struggling due to rising costs and high exchange rates since the end of last year. As they rely on imports for raw materials, soaring exchange rates lead to a sharp increase in manufacturing costs. A surge in exchange rates indicates a plummeting value of the won. Typically, companies store 3 to 4 months' worth of raw material inventory, and as high levels of exchange rates persist, the burden of expenses can only increase.
Lee Kyung-shin, a researcher at iM Securities, stated, "The possibility of raw material burdens due to the rising exchange rate will still be significant beyond the first quarter of this year," adding, "Recently, except for some increases in the futures prices of soybean, wheat, and raw sugar, the trends have been downward, but considering the impact of exchange rates, the burden may increase at least until the second quarter."
If the high exchange rate trend continues, food companies will also be directly hit. CJ CheilJedang stated in its third-quarter business report last year, "In a situation where all other conditions are the same, a 10% increase in the won-dollar exchange rate is expected to decrease after-tax profits by 14.1 billion won." At that time, the exchange rate applied by CJ CheilJedang was 1,352.85 won, the average exchange rate for the third quarter of last year. Considering that the current won-dollar exchange rate is in the 1,450 won range, it has already increased by about 7%. LOTTE Wellfood also indicated in its business report last year that "if the won-dollar exchange rate rises by 10%, pre-tax profits will decrease by about 4.8 billion won."
Recently, the domestic food and dining industry has been increasing product prices one after another due to cost burdens. In the consumer price index announced by the Statistics Korea on the 2nd, both the processed food price increase rate and the dining price index increase rate exceeded 3%. This is higher than the overall consumer price index increase rate of 2.1%.
Only this month, OTOKI, OB, Maeil Dairies, Subway, NOBLAND, Häagen-Dazs, and Paldo have raised prices. Earlier, major food corporations including CJ CheilJedang, Daesang, Dongwon F&B, LOTTE Wellfood, OTOKI, Nongshim, SPC, and ORION raised prices. Some dining establishments have raised prices twice within a year. KFC raised prices in June last year, McDonald's in May, and Lotteria in August last year, with all three companies raising prices again this month.
Professor Seo Yong-gu of Sookmyung Women's University said, "In a situation where domestic economic conditions are at their worst, the erratic tariff policy of the United States adds to the fear," and added, "The domestic political situation remains uncertain until the June election, so food companies will continue to be tempted to raise prices."
An industry official stated, "With the rising exchange rates, the pressure for additional price hikes is growing," and added that, "Although we are trying to refrain from raising prices because it will increase consumer burdens, if high exchange rates persist, price increases may become an unavoidable choice." The Fair Trade Commission is monitoring the possibility of price collusion among food companies.