Food companies that had delayed price adjustments due to the government's inflation stabilization efforts are now raising prices in response to high exchange rates and rising international oil prices. Concerns over raw material price increases due to instability in the Middle East suggest that food price pressures will continue for the foreseeable future.
According to industry sources, CJ CheilJedang will increase prices by an average of 8% for 27 items across eight categories, including Hetbahn, dumplings, and grilled fish, starting July 30 at major supermarkets. The price increases will be 12% for Hetbahn, 8.4% for grilled fish, and 4.6% for dumplings. However, some items, such as Hetbahn Cupban, sauces, and refrigerated or frozen noodles, will be excluded from the price hike to consider consumer burden.
Sajo will also raise the ex-factory prices of canned tuna, seafood canned goods, sauces, and cooking oils starting August 3. Canned tuna will see a 10% increase, while seafood canned goods like mackerel and saury will rise by 20%. Sauces such as gochujang, doenjang, and ssamjang, as well as sesame oil and perilla oil, will increase by 12%. Some fish cake and imitation crab products have already seen price increases of 6-7% since August 2.
Earlier, Ottogi adjusted the ex-factory prices of 29 items, including curry, glass noodles, ketchup, and pepper, starting July 16. The average increase was 17% for pepper products, 10% for glass noodles, and 6.1% for curry and ketchup. Lotte Chilsung Beverage also raised the ex-factory prices of 44 items across 12 brands, including Chilsung Cider, Pepsi, and Milkis, by an average of 5.3% starting June 26.
The restaurant industry is also experiencing price adjustments. The restaurant chain The Born Korea raised prices by an average of 11% for some menu items across 11 brands, including Yeokjeon Udon and Rolling Pasta, last month. Lotteria increased prices for major menu items in May, while MegaMGC Coffee and The Venti did so last month. Additionally, BBQ Chicken reduced the weight of its boneless chicken leg product from 800g to 700g, sparking controversy over 'shrinkflation.'
According to the National Data Agency, the consumer price inflation rate was 3.2% in June compared to the same month last year, marking the highest level since December 2023 and exceeding 3% for two consecutive months following May's 3.1%. While the inflation rate for processed food was only 0.9% during the same period, the recent wave of price increases by major food companies is expected to further heighten consumer price pressures.
Companies cite rising costs of raw materials, packaging, and logistics as the reasons for the price hikes. According to Lotte Chilsung Beverage, the price of aluminum, which was around $2,440 per ton in May last year, surged to $3,670 per ton in May this year, an increase of nearly 50%. Similarly, the price of naphtha rose from $568.6 per ton to $957.7 per ton, a jump of about 68% during the same period.
High exchange rates are also exacerbating the situation. The won-dollar exchange rate, which soared to 1,549.4 won at the end of last month, stabilized somewhat to the 1,490 won range as of July 16, but remains volatile due to Middle Eastern tensions and a strong dollar. For food companies that source raw materials and packaging from abroad, high exchange rates contribute to manufacturing cost burdens.
Moreover, tensions in the Strait of Hormuz due to renewed military conflict between the U.S. and Iran have led to rising international oil prices. According to the Korea National Oil Corporation's Opinet, Brent crude oil was priced at $88.1 per barrel as of July 15, a 23.1% increase since July 1, while Dubai crude and West Texas Intermediate (WTI) rose by 16.0% and 20.3%, respectively.
In its 'July Economic Situation Assessment' released on July 16, the Bank of Korea noted that rising oil and raw material prices due to the Middle East conflict have increased cost burdens for companies.
A food industry official stated, "We have absorbed cost burdens internally until now, but it has reached a level that is no longer sustainable. If exchange rates and international raw material prices do not stabilize, further price adjustments in the food and restaurant sectors are likely to continue for the time being."
* This article has been translated by AI.
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