Korean household costs to soar thanks to June price hikes

[Photo by Yonhap]

South Korean households are likely to face a significant cost burden from June 2024 onwards as major food and consumer goods companies across various sectors from household staples to consumer goods announced widespread price hikes.

The retail industry said on Sunday that Lotte Wellfood Co. will raise the prices of 17 chocolate products by an average of 12 percent starting in June due to a sharp rise in the price of cocoa. Some of the key items that will increase in price include Pepero (54 gram) chocolate snacks with a 5.8 percent increase to 1,800 won ($1.32) from 1,700 won, ABC Chocolate (187g) by 10.5 percent to 5,280 won from 4,780 won, Ghana Mild (70g) chocolate bars by 16.7 percent to 2,240 won from 1,920 won, and Binch (204g) chocolate cookies by 6.7 percent to 4,780 won from 4,480 won.

Lotte Wellfood had originally planned to implement the price hikes in May but postponed them at the government‘s request to delay the increases considering the high demand for confectionery in May due to the many family events and celebrations taking place during the month. The price of cocoa futures surged to $10,000 a ton in April 2024 and was $8,294 a ton on Friday, doubling since the beginning of the year.

Sempio Foods Co. and Dongwon F&B Co., the market leaders in soy sauce and laver, will also raise prices in June due to increased raw material costs.

Dongwon F&B will increase the price of its packaged laver products by an average of 15 percent. The price of its Yangban Perilla Oil Laver (20 packs) will increase by 15.8 percent to 10,980 won from 9,480 won, and Yangban Sesame Oil Laver (9 packs) will increase by 14.6 percent to 5,480 won from 4,780 won. The price of raw materials for these lavers has skyrocketed due to poor global harvests and the increased global demand due to the popularity of Korean food. Other laver manufacturers had already raised their product prices.

Sempio Foods plans to raise the prices of 30 soy sauce products by an average of 7.8 percent in mid-June. This will be the first price increase for Sempio Foods in two years since it raised the prices of 17 products by 11.5 percent in 2022 and the price of its flagship product, Naturally Brewed Soy Sauce 501, will increase by 11.8 percent. Other sauce manufacturers are likely to follow suit as the industry leader raises prices.

Fried chicken franchise Genesis BBQ Group initially announced a 6.3 percent average price increase effective Thursday, but postponed it to the end of the month, citing the difficulty of adjusting prices on delivery platforms as the first day of June 2024 is a non-business day. This is the first price increase in two years since May 2022, affecting 23 chicken products out of 110. The price of the company’s Golden Olive Fried Chicken will increase to 23,000 won from the current 20,000 won, and the price of its Jamaican Grilled Chicken will increase to 24,000 won from 21,500 won.

The prices of consumer goods sold at convenience stores will also rise, including razors, batteries and cigarettes. The price of a Gillette disposable razor will rise 12.5 percent to 2,700 won from 2,400 won, and the price of a Gillette Mach3 razor will increase 10.7 percent to 14,500 won from 13,100 won. The prices of all 17 types of Duracell batteries will increase, with two Duracell AA batteries going up 9.3 percent to 4,700 won from 4,300 won and four Deluxe AAA batteries going up 9.0 percent to 8,500 won from 7,800 won.

For cigarettes, BAT Rothmans’ Kent will increase by 200 won to 4,300 won from 4,100 won starting next month. The price hike will apply to five types of Kent cigarettes: Kent Switch, Kent White, Kent Blue, Kent Silver and Kent Click.

Manufacturers and retailers argue that the government’s direct and indirect requests to refrain from price hikes are not a fundamental solution as uncertainty remains in the global economy and raw material prices continue to soar. “The continuous rise in raw material prices and labor costs has exceeded what companies can bear,” a food industry insider complained, adding that delaying price hikes by a month or two is merely a temporary measure.