The prices of essential items in shopping baskets, such as instant noodles and eggs, have risen sharply, increasing the burden of living expenses. Although the overall inflation rate has remained in the low 2% range, the pronounced rise in necessities has intensified the pressure on the government to respond.
According to the Statistics Korea on the 2nd, the consumer price index in June rose by 2.2% compared to the same month last year. This is an increase of 0.3 percentage points from May's rate of 1.9%, marking the highest inflation rate in five months since January's rate of 2.2%.
◇ Rising living costs for instant noodles and eggs are a concern
The price of instant noodles, which has gained attention due to recent remarks by President Lee Jae-myung, rose by 6.9% compared to the same month last year. This is the highest rate of increase in 21 months since September 2023, when it was 7.2%. During the same period, egg prices also rose by 6.0%, reaching their highest level in three years and five months since January 2022, when the increase was 15.8%.
Park Byeong-seon, Director of the Price Trends Division at Statistics Korea, noted, "The rise in the price of instant noodles is the result of the sequential reflection of price increases in processed foods overall due to rising raw material prices and exchange rates," adding, "In the case of eggs, the increase in farm prices that has continued since the beginning of this year has been reflected in consumer prices since April, continuing the upward trend."
In particular, instant noodles significantly impact consumer perceptions of living costs. According to the Korean Statistical Information Service's 'Consumer Attitude Survey on Processed Foods,' the item that consumers reacted most sensitively to regarding shopping basket prices was noodles (18%). This was followed by dairy products (12.4%) and breads and cakes (8.4%). In reality, noodles accounted for the highest proportion at 15.3% of total expenditures on processed foods.
Although the price index for noodles is relatively low, the frequency of purchases means that the perception of price increases is more significant, according to Statistics Korea.
The government plans to focus its policy efforts on living costs items such as instant noodles and eggs. Deputy Prime Minister and Minister of Economy and Finance Kyoo Yoon-chul stated at his first press briefing on the 29th of last month, "We will focus on the prices of these items that we buy every day, such as eggs, instant noodles, and bean sprouts."
◇ Rising processed and seafood prices… Government to crack down on excessive charges during vacation season
Last month's inflation was driven by rising prices of processed foods and seafood. The price of processed foods rose by 4.6% compared to the same month last year, the highest level in 19 months since November 2023 (5.1%). The contribution of this category to overall prices was calculated at 0.39 percentage points.
Seafood prices also increased by 7.4%, marking the largest rise in 15 months since March 2023. Key species such as mackerel (16.1%), hairtail (10.6%), and squid (6.3%) showed notable price increases. It is interpreted that climate factors, such as rising sea temperatures, are leading to supply instability in seafood.
In contrast, agricultural product prices fell by 1.8%, contributing to overall price stabilization. However, some vegetables, such as garlic (24.9%) and pumpkin (19.9%), continued to see price increases.
The government plans to concentrate its response efforts on sensitive items related to living costs. The Ministry of Economy and Finance stated, "To stabilize food prices, we will continue discounts on agricultural, livestock, and fishery products, as well as expand tariff quotas." In fact, the price stabilization measures announced last month included the introduction of a new tariff quota for mackerel amounting to 10,000 tons from July to December.
Additionally, the government is closely monitoring potential price increases in lodging and dining services and the possibility of overcharging as the summer vacation season approaches. Personal service prices rose by 3.3% in June, outpacing the overall service price increase of 2.4%. Repair costs for appliances soared by 25.8% due to increased travel expenses during the peak season.
Lee Hyung-il, acting Minister of Economy and Finance, stated, "To ensure that citizens can enjoy a comfortable vacation without facing excessive charges during the summer vacation season, we plan to focus on managing food prices, accommodation fees, and the costs of vacation supplies until the end of August."
There are projections that the rate of inflation may slightly decrease in July. Kim Woong, Deputy Governor of the Bank of Korea, said, "Last month's temporary spike in oil prices and the base effects of agricultural, livestock, and fishery products widened the consumer price inflation rate, but if the recent stabilization of international oil prices and exchange rates continues in July, the inflation rate is expected to reduce."