Unraveling the Roots of Ongoing Inflation
Unraveling the Roots of Ongoing Inflation
  • Choi Eun-seo
  • 승인 2024.05.27 12:12
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(Provided by Freepik)
(Provided by Freepik)

  The recent inflation is unusual as it hits an all-time high this year, causing direct damage to ordinary people. In February, producer prices rose continuously, mainly in agricultural and fishery products such as fruits and fish.
  The producer price index for February, released by the Bank of Korea on March 22, stood at 122.21. It has risen steadily for seven months since August last year. Notably, in the agricultural, forestry, and fisheries sectors, apples surged by 135.8%, while cabbage saw a 51.6% year-on-year increase. 
  Then why are prices climbing and showing little sign of abating? The primary driver of inflation stems from a sharp decline in agricultural yield rates due to pests exacerbated by the climate crisis—drought, torrential rain, and abnormally high temperatures. Furthermore, there are additional contributing factors. Since Korea predominantly relies on fruit imports, consumers bear the brunt of elevated transportation and distribution expenses. Moreover, the diminishing cultivation area of agricultural products, a result of aging farmland, compounds the issue. While several factors contribute to inflation, President Yoon Suk-yeol emphasized at the state council that climate change is the underlying catalyst for the surge in agricultural prices.
  Additionally, the severity of inflation’s impact on our society exceeds expectations. An apple serves as a poignant example. According to Terran, a forecasting system that calculates the FarmAIR and Hankyung Korea Agricultural Product Price Index (KAPI), on March 13, the wholesale price of apples was 5,414 won per kg, up 1.96% from the previous week. Compared to a year ago, the figure is 97.33% higher. Moreover, a picture of the price of a cauliflower rising to 10,530 won was also circulated on the Internet, saying, “Cauliflower exceeded 10,000 won before the minimum wage.”
  As a result, the cost of eating out is bound to rise. According to the Korea Consumer Agency’s overall price information portal on May 1, the average price of eight food outings in Seoul, including kimbap and cold noodles, rose to 7% in March from a year ago.
  The franchise industry, which is familiar and accessible to us, has also begun to raise prices in earnest. Goobne Chicken, a chicken franchise brand, raised the price of nine menus by 1,900 won on April 15. McDonald’s, a hamburger franchise brand, raised the price of 16 menus by 2.8% on May 2. If prices continue to soar like this, ordinary people have no choice but to feel a burden on their livelihoods.

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