S. Korea’s food prices show fourth-highest increase among OECD states

More expensive: Egg prices advanced 41.7% on-year. The latest food price hike comes amid a decline in the production of agricultural goods. — Bloomberg

SEOUL: South Korea’s food prices increased at the fourth-highest rate among members of the Organisation for Economic Cooperation and Development (OECD) in January, largely due to a supply shortage brought on by bird flu, according to data and market experts.

January’s prices for groceries and nonalcoholic beverages soared by 6.5% on-year, more than twice the OECD average of 3.1%, data compiled by the OECD and Statistics Korea showed.

Among the 37 OECD member states, steeper increases were seen only in Turkey, Chile and Iceland, which recorded price rises of 18.1%, 7.8% and 6.7%, respectively.

In February South Korea’s food price inflation rate posted an even higher figure, 9.7%. It was the fastest gain since August 2011, when food prices rose 11.2%.

The latest food price hike came amid a decline in the production of agricultural goods triggered by a highly pathogenic strain of bird flu, experts said.

“A desirable situation that we expect is where food prices increase on the back of surging consumer demand as a result of economic recovery.

“However, recent price hikes were led by pressure from the supply side due to the outbreak of bird flu, ” said Jung Kyu-chul, economic outlook director at the Korea Development Institute.

According to Statistics Korea, chives increased in price by a record 227.5% last month from a year earlier, the sharpest gain since May 1994, when they rose 291.4%.

Egg prices advanced 41.7% on-year, while the cost of apples, red pepper flakes and pork all jumped in the same month – 55.2%, 35% and 18%, respectively.

Affected by these on-year price hikes, the consumer price increase rate rose from 0.6% in January to 1.1% last month.

Meanwhile, Jung of KDI forecast that food prices would rise slightly between April and May if the price of petroleum products increased.

He said there was a limited possibility that inflation would rise sharply in the short-term as supply shortages of farm products would ease in the spring. — The Korea Herald/ANN

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