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[Editorial] Soaring food prices

Government must try to stabilize public livelihoods with fundamental measures

Nov. 7, 2023 - 05:31 By Korea Herald

Grocery price increases are threatening the livelihood of those already struggling to make ends meet.

According to Statistics Korea, the grocery price index rose 6.6 percent last month from a year earlier. This is the sharpest rise in 12 months after 7.6 percent recorded in October last year.

Looking at price increases of fruits such as apples (72.4 percent) and vegetables including lettuce (40.7 percent) and green onions (24.6 percent), complaints that inflation is an "invisible thief" are understandable.

To add insult to injury, food companies have hiked up prices of their processed foods, aggravating the economic distress of the ordinary working class. Top causes of food price inflation include rising prices of crude oil and raw ingredients such as grains and low crop yield due to weather anomaly.

A bigger problem is that rising food prices have been accumulating for years. Grocery and nonalcoholic beverage prices rose 4.4 percent in 2020, and 5.9 percent in both 2021 and 2022. They rose 5.1 percent year-on-year from January to December. At this rate, it is likely to rise around 5 percent this year. If food price inflation tops 5 percent for three consecutive years, it would be the first time after the 2009 to 2011 period.

Food price inflation is hitting low-income classes harder. Households in the bottom 20 percent spent 44.4 percent of their disposable incomes on food, nonalcoholic beverages and eating out. Their eating expenses are just about a third of that spent by households in the top 20 percent, but when compared in view of share in disposable income, the proportion for households in the bottom 20 percent is more than three times as much as 14.5 percent for the top 20 percent.

Just as people thought prices had risen enough, they rose again. With this situation repeating, the livelihood of the working class has become more and more difficult. It is almost impossible to find food items whose prices have stayed the same. Prices of just about every food ingredient -- apple, pear, eggs, milk, meat and processed foods -- are all soaring.

Not to mention eating-out expenses. These days it is not so surprising to see markups on restaurant menus.

With the situation becoming grave, the government said it will create a task force to micromanage the prices of seven major foods -- Korean instant noodles, bread, snacks, coffee, ice cream, sugar and milk. This implies that after all, the government will put pressure on related industries to suppress hikes as much as possible.

But how effective this approach will be is a toss-up. In addition to external factors still having strong influence on prices, money supply increased remarkably during the COVID-19 crisis. Unless this environment should change, finding an effective solution hardly looks easy.

Overall prices are rebounding. Consumer prices dropped 2.3 percent year-on-year in July but bounced up 3.4 percent in August and rose again 3.7 percent and 3.8 percent in September and October, respectively.

Prices have a direct and strong effect on the lives of the working class, among others. If prices keep soaring while workers receive a pittance for a raise, they are bound to be worse off.

The first thing for authorities to do is to sever the connecting links of price increases. Importing farm produce and releasing agricultural products stockpiled by the government can be the starting point. The government must also crack down on companies jumping on the bandwagon of raising product prices unreasonably.

Financial hardships due to high inflation are a major cause of social unrest. Soaring food prices can unsettle the political situation and shake the regime. Immediate stop-gaps are important, but more fundamental, long-term ones are needed. While trying to stabilize food prices as soon as possible, the government must strengthen support as well for the economically vulnerable class.