With just over a month until Chuseok, major food companies are raising product prices. Items commonly purchased by consumers, such as ramen, dumplings, bread, and instant rice, are joining the price hike trend. While it is true that rising raw material costs and currency fluctuations have increased corporate burdens, raising prices on popular products during a peak demand season before the holiday will inevitably add to consumers' financial strain. Even if companies' operational challenges are acknowledged, the timing, items, and extent of the price increases must be scrutinized.
Ottogi plans to raise the average ex-factory price of 29 cup noodle products, including Jin Ramen and Yeol Ramen, by 6.7% next month. Paldo will increase the ex-factory prices of some cup noodles and beverages by an average of 5%. Samlip is raising the prices of over 50 types of bread by an average of 9%. Paris Baguette will also increase the prices of 127 items, including bread, cakes, and desserts, by an average of 5%. Already, Nongshim has raised the prices of cup noodles and snacks by an average of 5.8%, while CJ CheilJedang has increased the prices of 27 items, including Hetbahn and dumplings, by an average of 8%. The overlapping price adjustments from individual companies are creating upward pressure on overall food prices.
It is important not to overlook the circumstances of the food industry. The instability in the Middle East has caused significant increases in the prices of key raw materials such as sugar, wheat, and palm oil, as well as the cost of naphtha, a packaging material. Currency exchange burdens, rising labor costs, and increased logistics expenses are also factors pressuring profitability. It is unrealistic to expect companies to absorb all cost increases without adjusting prices. When costs exceed a certain level, price adjustments become necessary.
The government’s artificial price controls have also led to negative side effects. Some companies initially lowered prices for ramen, snacks, bread, and flour in line with the government's price stabilization efforts at the beginning of the year, only to raise them again a few months later. This reflects a 'price spring' effect, where suppressed prices return to their original levels. However, what matters to consumers is not the circumstances surrounding the price increases but the immediate impact on their wallets. Ultimately, this can lead to increased burdens at the time of price rebounds and erode trust in government policies.
A more significant issue is that the criteria for price adjustments are not sufficiently understandable from the consumer's perspective. When lowering prices, companies tend to target less popular products, while they prioritize popular items with high market shares when raising prices. Increasing the prices of dumplings and instant foods, which see higher demand before the holiday, will naturally lead to a greater perceived burden for consumers than what statistics might suggest. It is essential to determine whether the price increases reflect rising costs or are preemptive measures to maintain profitability.
Additionally, the practice of announcing price increases on Fridays has drawn criticism. This timing is seen as an attempt to minimize public attention and criticism regarding sensitive price hikes. When multiple companies announce price adjustments in a similar manner, consumers may perceive it as an effort to quietly pass along bad news.
Companies have a responsibility to maintain consumer trust. Rather than hastily implementing price increases ahead of the holiday, they should carefully consider the timing and extent of these adjustments. If they give the impression of unilaterally passing cost burdens onto consumers, they may face greater losses in trust than any short-term improvements in performance.
Holiday prices are a direct indicator of how households experience economic realities. While reasonable price adjustments by companies should be respected, the process must be transparent and responsible. The government should focus on reducing cost burdens and enhancing market fairness rather than resorting to superficial price controls.
* This article has been translated by AI.
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