Cost of Korea’s furniture exceeds consumer inflation amid frequent price hikes

[Photo by Lee Chung-woo]

The inflation rate for sofas in South Korea increased by more than 20 percent last month, while desks exceeded the 10 percent mark and kitchen sinks came close to 10 percent, data showed on Thursday.

According to Statistics Korea’s Korean Statistical Information Service (KOSIS) on Thursday, the consumer price index for sofas stood at 119.15 in June, up 20.7 percent from the same month last year.

The figure remained at the same level last month after jumping to 20.7 percent in May from 1.5 percent in April.

Desks saw an 11.3 percent inflation rate last month, sinks 9.6 percent, beds 6.9 percent, chairs 6.8 percent and dining tables 6.3 percent.

All were more than double the overall consumer price inflation rate of 2.7 percent.

While the inflation rate for desks slowed last month after rising from 4.6 percent in March to 12.4 percent in April and further to 17.4 percent in May, it is still above the 10 percent mark.

Kitchen sinks approached the 10 percent mark last month after rising to 6.3 percent in May from 1.6 percent in April.

The high inflation rate for major furniture items is due to a series of price hikes in the furniture industry.

Hanssem Co., the top player in the furniture industry, raised prices for major products five times last year and increased prices for beds and student furniture in the first three months of this year.

The company also plans to raise prices of all items in the home furnishing sector by an average of around 3 percent on July 17.

[Courtesy of Hyundai Livart Furniture]

Hyundai Livart Furniture Co. also raised prices of its home furnishing brand’s sofas, beds, chairs, and other items at offline stores by about 5 percent in January after hiking furniture prices three times last year. Last week, the company also increased the prices of some home furnishing items by about 5 percent.

“We have been holding the line on price increases at 2 to 5 percent annually amid a 30 percent surge in costs over the past three years, but a slight increase is inevitable this year,” a Hyundai Livart official said.

IKEA Korea and iloom increased prices three times last year, while Tempur Sealy International Inc. increased prices twice. Ace Bed Co., Shinsegae Casa Co., Emons Furniture Co., and Enex Co. also raised prices last year.

Furniture companies attributed the price increases to rising raw material prices and labor costs as well as a slowdown in the real estate market.

However, some saw the price hikes as a response by furniture companies to their sluggish performance as the prices of raw materials, such as lumber, have stabilized recently.

Hanssem posted an operating loss of 21.7 billion won ($17.02 million) last year, marking its first loss since being listed on the stock market. It also posted an operating loss of 15.7 billion won in the first quarter of this year.

Hyundai Livart also reported an operating loss of 27.9 billion won last year, its first loss since Hyundai Department Store Co. acquired it in 2012. The company also posted an operating loss of 7.6 billion won in the first quarter of this year.

Shinsegae Casa and Enex posted operating losses of 27.7 billion won and 23.5 billion won last year, respectively, while iloom and Emons Furniture posted profits, but their operating profits dropped significantly from the previous year to 15.2 billion won and 400 million won, respectively.

Ace Bed and Simmons Bedding Co. also posted operating profits of 65.3 billion won and 11.8 billion won last year, but the profitability was smaller than the previous year.