South Korea saw its food prices jump in January, the fourth-biggest increase among OECD member countries. In February, which overlaps the Lunar New Year holiday, food prices recorded the biggest jump in the past nine and a half years.
According to the monthly food and non-alcoholic beverages price index released by the OECD on Monday, Korea’s food prices rose by 6.5 percent year-on-year in January, the fourth-largest increase among 37 OECD member countries following Turkey (18.1%), Chile (7.8%), and Iceland (6.7%).
The increase was even greater in February. The prices of food and non-alcoholic beverages in Korea increased by 9.7% year-on-year, the highest since August 2011 (11.2%). Considering that most of the member countries did not calculate food price inflation for February and Iceland, which ranked third in January, had food price inflation of 6.4 percent in February, Korea’s ranking is expected to rise further in February.
The increase in food prices is attributable to a reduction in supply due to poor weather conditions and the spread of avian influenza as well as a boost in demand for home-made food amid the Covid-19 pandemic and holiday consumption. According to Consumer Price Index for February from Statistics Korea, prices of agricultural, livestock, and marine products rose 16.2 percent compared to the same month of last year, which marked the biggest increase in the past 10 years since February 2011 (17.1%).
“It is difficult to say that prices will continue to rise since deteriorating climate conditions and the spread of avian influenza are factors that temporarily reduce supply,” said Ha Joon-kyung, an economics professor at Hanyang University. “Inflation begins in earnest when it coincides with the rise of labor costs. As the labor costs are not currently increasing due to the tough job market, we have not reached a point where we should be concerned.”