A Starbucks store in Seoul. Yonhap News
[Financial News] As the Lunar New Year holiday approaches, there’s a wave of price increases for food items like coffee and burgers. This trend is attributed to rising raw material costs due to high exchange rates, and compounded by climate inflation. Some speculate that companies, wary of government scrutiny, are taking advantage of the political turmoil surrounding impeachment and the upcoming extended holiday period to adjust prices. This would further strain household budgets, with dining out becoming more expensive amid already high inflation pressures.
■ Coffee prices rise just before the Lunar New Year
According to industry sources on the 27th, prices in the dining sector, including coffee and burgers, are rising just ahead of the Lunar New Year holiday.
On the 24th, just before the holiday period, Hollys Coffee raised the prices of certain products by 200 to 300 won. This was Hollys Coffee’s first price hike in seven months, since June last year.
A representative from Hollys Coffee stated, “Due to the significant increase in key raw material costs, we were compelled to adjust the prices of certain menu items, but we have maintained the toll size prices of popular coffee options to minimize the impact on customers.”
Recently, coffee bean prices have risen, and the Korean won has weakened, prompting Starbucks and Paul Bassett to also increase their coffee prices.
Starting on the 24th, Starbucks Korea raised the prices of 22 tall-sized beverages by 200 to 300 won. Besides coffee, tea beverages have also seen price hikes. Starbucks has implemented three price increments in the past five months.
For popular beverages like the Cafe Americano, Cafe Latte, and Cappuccino, both tall and short sizes have gone up by 200 won. The leading bestseller, the Americano tall size, now costs 4,700 won, up by 200 won.
Cold Brew, Milk Tea, and Yuzu Mint Tea are among eight items for which only the tall size prices have increased by 200 won. Today’s Coffee prices increased by 300 won for both tall and short sizes, while grande and venti sizes went up by 100 won each.
Paul Bassett, operated by Maeil Dairies’ affiliate M’s Seed, also raised the prices of main products by 200 to 400 won starting on the 23rd, with an average increase of 3.4% for 28 items.
The price of a Cafe Latte increased by 200 won to 5,900 won, and ice cream went up by 300 won to 4,300 won. This is Paul Bassett’s first price increase in 2 years and 10 months.
A citizen walks past a Burger King store in Seoul. Newsis
■ Did they capitalize on the political turmoil?
The burger industry has also increased prices. On the 24th, Burger King raised the prices of some products by 100 won each. As a result, the popular Whopper now costs 7,200 won, up from 7,100 won. The Garlic Bulgogi Whopper price increased from 7,400 won to 7,500 won, and the Whopper Junior from 4,700 won to 4,800 won. French fries saw a price hike from 2,100 won to 2,200 won. It was Burger King’s first price increase in approximately 22 months since March 2023.
Burger King explained, “The price adjustment was unavoidable due to the continued cost pressures from the global raw material prices and the rise in the won-dollar exchange rate.”
However, there are analyses suggesting that companies, previously cautious of government scrutiny, are using the opportunity presented by the political unrest and impeachment to raise prices.
According to an analysis submitted by the Korea Rural Economic Institute to Democratic Party lawmaker Kim Hyun-jung, examining the domestic economic impact of the impeachment situation, the consumer price index for agricultural, fisheries, and livestock products rose by 7.5% from October 2016 to March the following year, during the impeachment of former President Park Geun-hye. This was more than double the 20-year average of 3.5%.
Lawmaker Kim’s office stated, “During the tumultuous political environment following President Park Geun-hye’s impeachment eight years ago, consumer price indexes for agricultural, fisheries, and livestock products soared more than twice the usual rate due to the Lunar New Year demand. The Fair Trade Commission must thoroughly monitor to prevent a recurrence of such situations.”
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