Agricultural product prices soaring amid oil price hikes

Inflation continued its upward trajectory for three consecutive months, with a 3.8% increase in consumer prices last month. Soaring prices of agricultural products such as apples, rice, and lettuce, coupled with the relentless surge in international oil prices, have added to the burden of rising consumer prices. With the growing year-end inflationary pressures, including the possibility of electricity price hikes, the government has introduced a comprehensive plan for price stability involving various departments.

According to data released by Statistics Korea on Thursday, consumer prices in October rose by 3.8% year-on-year. The rate of consumer price increases, which had declined from 5.2% in January to 2.3% in July, rebounded in August (3.4%) and September (3.7%), marking a continuous increase for the past three months.

By individual item, the price increases in agricultural and marine products were salient among others. Prices of items such as apple (72.4%), rice (19.1%), tomato (22.8%), green onion (24.6%), and lettuce (40.7%) saw substantial rises, leading to a 13.5% overall increase in agricultural product prices. This is the highest increase in over two and a half years since May 2021 (14.9%).

As a result, various indices that measure the "basket of goods" experienced a substantial increase. The Fresh Food Index, consisting of items with price fluctuations depending on weather and seasons, rose by 12.1% compared to the previous year, marking the highest increase since September 2022 (12.8%). The Fresh Fruit Index surged by 26.2%, representing the most significant increase in 12 years and nine months, since January 2011 (31.9%).

The government explained that while the prices of agricultural products usually stabilize during the autumn harvest season, this year, delayed harvesting due to unseasonably low temperatures at the beginning of last month led to price increases in many items. It is estimated that agricultural products contributed to about 0.61 percentage points of the overall inflation rate last month.

To maintain price stability, the government has initiated a special price stability system involving various departments. In response to the sharp price increases in kimchi ingredients, they plan to expand the supply of items such as cabbage and salt, committing 24.5 billion won, a record high, to provide discounts on 14 types of kimchi ingredients. Additionally, they will continue to provide energy vouchers and gas bill discounts for low-income households to alleviate winter living expenses, maintaining last year's expanded levels.


Do-Hyong Kim dodo@donga.com