Consumer Prices Rise by 1.8% in August; Rice Prices Up 11% from Last Year
According to the statistics, consumer prices rose by 1.8% in August, with agricultural and livestock product prices increasing by 4.4%, highlighting a marked rise in rice and livestock prices.
The government is considering expanding the discount on consumer prices of rice through distribution channels to alleviate the burden on consumers due to rising rice prices. While the overall inflation rate has stabilized, rice prices have surged by 11% compared to the previous year.
As reported by the Ministry of Agriculture, Food and Rural Affairs, the consumer price survey for August by Statistics Korea indicated that the prices of agricultural and livestock products rose by 4.4% year-on-year. During the same period, the overall consumer price index saw a 1.7% increase, but the high price rise in agricultural and livestock sectors stood out. According to Hong In-ki, the policy director for distribution and consumption at the ministry, the increase in rice prices is attributed to supply shortages faced by local distribution firms and the base effect from last year, coupled with international price hikes.
Rice prices soared by 11% year-on-year as competition among local distributors for raw grains intensified. The statistics released on August 27 showed that the price of rice per 80kg bag was 218,520 KRW, up 1.8% from the previous tally on August 15.
To stabilize rice prices, the government is currently supplying 30,000 tons of government stockpiled rice to the local distribution market, which will be fully released in September. Additionally, a discount event on consumer rice prices initiated on August 1 by major distributors is ongoing, with considerations to increase the current 3,000 KRW discount per 20kg to 4,000~5,000 KRW. A representative from the Ministry of Agriculture remarked that the current focus is on consumer rice prices as general consumers and small business owners bear more of the burden compared to large-scale purchasers prone to annual contracts.
Besides rice, the rise in livestock prices also contributed to higher agricultural and livestock product prices. Livestock prices increased by 7.1% year-on-year due to the previous year’s low base of Korean beef prices and the rising international price of pork. Korean beef prices were low due to oversupply last August, while pork prices in the U.S. rose from $1.20 per kg last year to $2.51 this year, marking a 14% increase.
Vegetable prices have been relatively stable. Although cabbage supply decreased in late August due to high temperatures and heatwaves, the government released 35,500 tons to the market, maintaining stable pricing. Cabbage retail prices decreased from 6,923 KRW per head in mid-August to 6,607 KRW in late August, a 7.4% decrease from last year. Increased production of radishes, carrots, and cabbages led to falling prices, prompting promotional measures to boost consumption.
Hong, the policy director, also stated, “Recognizing that abnormal weather and complex distribution structures are exacerbating price volatility, we plan to devise measures to improve distribution systems within the year to fundamentally resolve repeated supply-demand issues in agricultural and livestock products.”