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Heat wave pushes cost of living up even further

Aug 01,2018
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The cost of living is on the climb as prices of bottled water, snacks and frozen foods have increased each month this year. Thanks to the heat wave, produce prices are soaring, too.

“I have to spend more time grocery shopping these days,” said Mrs. Han, a housewife in her 30s. “I have the same limited budget, but food prices keep going up. I figured vegetables are costing more because of the heat wave, but even things like snacks and frozen foods are more expensive now. It’s very time-consuming to find cheaper products.”

Bottled water and Coke were the first categories of processed foods to announce price hikes. Nongshim raised the price of its Baeksansoo mineral water by 7.8 percent in January, and Coca-Cola followed suit in February, raising prices on 17 products by an average of 4.8 percent.

In March, CJ Cheil Jedang raised the prices of 54 products including eomok, or fish cakes, Spam and Hetbahn, microwaveable white rice. After Lotte, Haitai, Crown Confectionery and others raised prices on products in April and May, snacks became more expensive across the board.

Ottogi raised prices of 16 products in June, with their black pepper powder increasing a staggering 47 percent. In July, Paldo’s Birak sikhye (a traditional sweet rice beverage) and soojeonggwa (sweet cinnamon punch) rose from 900 won ($0.80) to 1000 won per can. The price of packaged milk is also expected to go up by at least 50 won in August after the price of raw milk went up by 4 won per liter.

With the heat wave affecting farms across Korea, produce is becoming more expensive. According to the Korea Agro-Fisheries and Food Trade Corporation, retail prices for cabbages rose 55 percent from the normal price in an average crop year to 4,163 won as of Friday. The retail price of Napa cabbages rose 36 percent and turnips rose 27 percent. According to analysts, if the heat wave is prolonged, items that are relatively stable in price, such as apples, are likely to also get pricier.

“Unlike price increases during a period of economic growth, the cost of living is rising despite incomes remaining stagnant or going down,” said Lee Jeong-hee, a professor of economics at Chung-Ang University. “This will deal a serious blow to low-income families.”

Some say Korea should get used to hotter summers and plan accordingly.

“It’s necessary to prevent price hikes by making more precise and active predictions of supply and demand rather than just blaming the weather for causing problems,” said Shin Se-don, an economics professor at Sookmyung Women’s University.

Companies’ reasons for hiking prices should be more closely examined, according to some. As processed foods have low unit prices and are often necessities, raising prices does not have a major impact on sales - but they will on profits.

“Companies’ price increases need to be checked to see if the reasons for the increases are appropriate and fair,” said Choi Bae-geun, an economics professor at Konkuk University. “The government shouldn’t have to be involved in every single case, but it should intervene to prevent unethical business practices such as acts of collusion.”


BY KANG NA-HYUN, KIM MIN-JOONG [ebusiness@joongang.co.kr]