Rise in grocery and auto fuel prices hits highest level in 10 years

Products, such as red pepper paste and soybean paste, were on display at a major discount chain in Seoul last Tuesday. (Yonhap)

SEJONG — Consumer prices for groceries and transportation in Korea rose at the fastest pace in a decade in 2021, increasing the financial burden on households amid the pandemic, data from the UIS showed on Monday. State.

These two elements were found to be behind the volatility in overall consumer prices last year, despite the Bank of Korea’s two interest rate hikes in August and November.

According to Statistics Korea, consumer prices for groceries rose 5.9 percent in 2021 from a year earlier, with food rising 6.2 percent and beverage rising 1.8 percent. This is the strongest growth in 10 years, since 2011.

An increase of 11.4% was observed in the prices of milk, cheese and eggs, as well as 10.7% in fruit, 8.4% in meat, 7.2% in edible oils and fats , 6.3% in bread and cereals and 4.2% in vegetables and seaweed.

Food price growth was 2.3% in 2016, 3.4% in 2017, 2.8% in 2018 and 0% in 2019. It rebounded to 4.4% in 2020 and climbed further to 5.9% in 2021.

Transport prices climbed 6.3% year-on-year, which includes fuel for automobiles and fares for buses, trains and flights, the figure also registering the highest in a decade. Of these, in particular, automobile fuel posted a remarkable growth of 11.1%.

This was attributed to a spike in international crude prices, which fueled the 14.8% spike in gasoline prices in the local market, as well as 16.4% in diesel prices and 18% in price of liquefied petroleum gas.

“As groceries and fuel for cars are classified as daily necessities, it is estimated that a large portion of households have suffered a heavy financial burden due to price growth,” said a researcher based in Seoul.

Data from Statistics Korea also showed that prices for food services in restaurants recorded growth of 2.8%, although growth in accommodation services was only 0.5%.

In contrast, relatively weak price growth was reported in education services at 0.9%, clothing and footwear at 0.6%, entertainment and culture at 0.4% and alcoholic beverages at 0. .4%. The social distancing of COVID-19 is believed to have caused people to spend less on these items as it has reduced outings and recreation.

Although the government has taken various measures to reduce consumer prices, there are few forecasts that the growth will stop in the near future.

The researchers say that the recovery in domestic demand and external factors – such as logistical problems in global supply and soaring energy prices – continue to stoke inflation.

A BOK report predicts that a longer-than-expected global supply problem will have further effects on the local market, which will create inflationary pressure in broader segments.

Some market watchers are concerned about the supplementary budget worth 14 trillion won ($11.7 billion), which will be proposed to the National Assembly this week, in terms of negative impact on the burden of household costs.

Deputy Prime Minister and Finance Minister Hong Nam-ki predicted that the negative impact would be limited as long as the volume of the supplementary budget – to be favored for micro-enterprise owners – is not increased.

Some ruling party lawmakers are asking the finance ministry to increase the size of the budget from 14 trillion won to 35 trillion won.

By Kim Yon-se ([email protected])

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