Food Prices to Keep Rising

  • By Lee Mi-ji

    September 01, 2022 12:18

    Korea's No. 1 instant-noodle manufacturer Nongshim decided to raise prices after Chuseok, and other food makers are following suit.
    Nongshim decided to raise prices by another 11.3 percent next month to reflect the soaring costs of flour, palm oil and other ingredients. It already hiked prices by 6.8 percent in August 2021 after freezing them for almost five years.
    Across the board, instant-noodle prices have risen about 19 percent since last year.
    Instant noodles are a staple of low-income households in Korea.
    Nongshim says it has no choice because sales in the second quarter this year increased 15.6 percent on-year but it suffered a W3 billion operating loss (US$1=W1,338). The last time Nongshim suffered a loss in the domestic market was in 1998.
    "International conflict and inflation caused raw ingredient prices to surge, which has driven up our costs," a company spokesperson said.
    Rival Ottogi hiked prices by 11.9 percent in August last year, Samyang 6.9 percent and Paldo 7.8 percent.
    Palm oil and wheat prices account for more than 50 percent of raw material costs. The international price of wheat surged 80.7 percent to US$365 per ton in the first half of this year, and the price of palm oil a whopping 147 percent to $1,554 per ton.
    "There are many reasons to raise product prices, but that could make conditions tougher for consumers in tough economic times, so we are in a difficult spot," an industry insider said.
    Overall, snack prices have risen 5.7 percent on average. McDonald's is raising prices by 4.8 percent next month. The fast-food franchise raised prices six months ago by W100 to W300. That means the price of its signature Big Mac will rise from W4,600 to W4,900.
    Rival franchises No Brand Burger and Mom's Touch also raised prices, while coffee chains Starbucks, A Twosome Place and Hollys Coffee are planning to raise them later this year.
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