South Korean Food Prices Surge Due to Rising Costs Amid Iran Conflict
Amid the ongoing impact of the Iran conflict, South Korean food and beverage companies are raising prices due to increasing costs of raw materials and exchange rates. Lotte Chilsung Beverage has increased wholesale prices for 44 products across 12 brands, citing heightened expenses related to packaging, raw materials, and logistics. This price adjustment, the first since June 2024, affects major products such as Chilsung Cider, Milkis, and Let's Be coffee.
A Lotte Chilsung official noted that while raw material prices have started to stabilize following a ceasefire agreement involving the United States and Iran, earlier production cost surges have necessitated the price increases. Naphtha, crucial for producing plastic bottles, saw its price rise to $1,018 per metric ton in March, a significant increase from $638 per metric ton the previous year.
Harim, another major player in the food sector, will raise prices for 26 convenience store products, including chicken breast and fish cake bars, by 100 to 300 won starting next month. The company attributes this price rise to increased import costs for feed grain and other inputs due to the weak won. Discussions are ongoing regarding price adjustments for other retail channels, such as hypermarkets and online platforms.
The impact is also seen in ready-to-eat meals and popular snacks like tteokbokki. Ourhome, a subsidiary of Hanwha Group, announced a 7.7% price increase on its frozen meal brand "OntheGo," effective July 1. Additionally, Hot Seasoner, which operates the Dongdaemun Yupdduk tteokbokki franchise, plans to raise prices by about 7% after a one-year grace period, marking its first increase in 17 years.
Experts indicate that the rise in logistics and raw material costs, exacerbated by the weak won and the conflict in Iran, is leading to higher consumer prices. Lee Hong-joo, a consumer economics professor, highlighted the risk of stagflation, where rising prices coincide with economic slowdown, impacting consumer spending and potentially triggering a negative economic cycle.
