Curb Price Hikes through Consumer Power

Subject: Trend in Product Prices for New Year's Day, 2011

According to a survey of products for New Year's Day conducted at twenty department stores, 31 discount marts, 30 supermarkets and 19 traditional markets in 25 gus (counties) in Seoul between January 19 and 20, 2011, the prices of 22 items rose compared with the previous year, while the prices of five items decreased. Therefore, most products for New Year's Day showed a rising price trend, including fruits, crops and fisheries. Korean hulled mung beans, apples, sweet persimmons, imported bell flower roots, imported dried permissions, pears, Korean yellow corvinas and tofu led this upward trend. As such, the purchasing cost of products for New Year's Day for four-member families rose by 9.1% compared to last year.

(1) Price Trend of Products for New Year's Day

▶ 15 days ahead of New Year's Day (Feb. 3), according to a survey results of 27 items' prices for New Year's Day, the prices of most items for memorial services for ancestors - including Korean hulled mung beans, apples, sweet persimmons, imported bell flower roots, imported dried persimmons, pears, Korean yellow corvinas, tofu, Korean dried persimmons and pork - showed an upward trend. Actually, the purchasing cost of the main items for New Year's Day rose by 9.1 compared with the previous year.

① Items whose prices rose (22 items)

The product whose price rose most was Korean hulled mung beans (63.9%), but the following items' prices rose sharply (figures given in descending order): apples (43.5%), sweet persimmons (42.2%), imported bell flower roots (40.1%), imported sweet persimmons (36.5%), pears (34.8%), Korean yellow corvinas (34.7%), tofu (33.2%), Korean dried permissions (27.9%), pork (23.3%), chestnuts (18.3%), dried yellow Alaskan Pollack (16.3%), imported hulled mung beans (15.8%), yellow corvinas (15.3%), eggs (12.6%), jujubes (10.8%), Korean bracken (5.9%), dried Alaska Pollack (4.0%), deep-fried honey cookies (3.5%), Korean bell flower roots (2.8%), clear strained rice wine (1.9%), and bar rice cakes (1.7%).

② Items whose prices decreased (5 items)

The price of spinach (-14.1%) showed the greatest decrease, followed by imported bracken (-7.9%), beef (-7.1%), flour (-5.4%) and chicken (-5.2%).

③ Trend by item

According to the results of the survey:

- Regarding crops, Korean hulled mung beans showed the highest price hike at 63.9%, with the price of imported hulled mung beans also rising sharply by 15.8% on the previous year.

- Regarding fruits, the prices of apples, sweet permissions and pears showed a sharp upward trend at 43.5%, 42.2% and 34.8%, respectively.

- Regarding nuts, the prices of imported dried persimmons, Korean dried persimmons, chestnuts and jujubes rose sharply by 36.5%, 27.9%, 18.3% and 10.8%, respectively.

- Regarding fisheries, the prices of Korean yellow corvinas, imported yellow corvinas, dried yellow Alaskan Pollack, and dried Alaskan Pollack rose by 34.7%, 15.3%, 16.3% and 4.0%, respectively.

- Regarding vegetables, imported bell flower roots, the prices of Korean bracken and Korean bell flower roots rose by 40.1%, 5.9% and 2.8%, respectively, but the price of imported bracken fell by 7.9%.

- The prices of tofu, deep-fried honey cookies, clear stained rice wine and bar rice cake rose by 33.2%, 3.5%, 1.9% and 1.7%, respectively, while that of flour fell by 5.4%.

- Regarding meat, the prices of pork and eggs rose 23.3% and 12.6%, respectively, but those of beef and chicken fell 7.1% and 5.2%, respectively.

This year, the prices of fruits rose sharply because of a decrease in shipment volume from the places of production, due mainly to a persistent cold wave. Also, nut prices rose sharply owing to a decrease in output arising from low temperature phenomena. Meanwhile, vegetables showed a stable price trend compared with the previous year. Meat prices were expected to rise greatly, as a result of the outbreak of foot and mouth disease, but only the prices of pork and eggs rose sharply, while beef and chicken showed a stable trend, thanks to the discount events organized by distribution companies. However, as New Year's Day approaches, if the supply of livestock becomes unbalanced, the shortage is likely to contribute to a price hike.

Unstable consumer sentiment regarding prices has reached high, due to international raw material and oil prices, and increases in public utility charges are also expected. In this context, the price hike at the beginning of the year is likely to become a price increase factor, even after the New Year's holidays. Therefore, measures to curb prices and continuous price monitoring are required.

▶To ensure the stability of product prices for New Year's Day, the smooth supply of those products needs to be managed, and the securing of livestock products seems to be a most urgent matter. In addition, a continuous crackdown on the marking of the place of origin needs to be consolidated to prevent forgeries or modifications of the origin of place aimed at exploiting the enormous demand during the New Year's Day holidays.

(2) Cost of New Year's Day Memorial Service Table

(based on a four-member family)

▶Major items for the New Year's Day Ancestral Memorial Service based on a four-member family (22 items)

① Crops: Korean hulled mung beans (500g)

② Fruits: Pears (Shingo, 700g, 5 pears), apples (Busa 300g, 5 apples), sweet persimmons (200g, 5 persimmons), chestnuts (Korean, 1kg), jujubes (Korean, 300g), Korean sweet persimmons (8 persimmons per box)

③ Vegetables: Spinach (400g), Korean bell flower roots (400g), Korean bracken (400g)

④ Fisheries: Imported yellow corvinas (25cm), dried Alaskan Pollack (400g), dried yellow Alaskan Pollack (1, 40㎝),

⑤ Livestock products: Beef (1kg, sirloin, first grade), pork (1kg, chunk roll), chicken (1kg), eggs (general eggs, 30 eggs per tray)

⑥ Industrial products: Bar rice cake (2kg), flour (2.5kg), tofu (5 pieces), clear strained rice wine (Subok Gold, 1.8L), deep-fried honey cookies(350g)

▶The average purchasing cost of a four-member family was KRW 254,937. The comparison of purchasing costs from each seller is as follows:

① Department stores: KRW 344,132 ② Discount marts: KRW 251,428

③ Supermarkets: KRW 230,350 ④ Traditional markets: KRW 203,450

The purchasing cost of KRW 140,682 at traditional markets was almost half the cost of department stores, or 40.1% lower.

▶ Purchasing costs by seller in comparison with the previous year rose by 9.1% on average, with rises of 10.5%, 10.8%, 8.3% and 6.7% at traditional markets, discount marts, supermarkets and department stores, respectively.

(3) Comparison of purchasing costs for four-member family by region In a comparison of the purchasing costs of four-member families by region, Seoul had the highest average cost at KRW 254,937, and Chungnam the lowest at KRW 200,351, showing a difference of 21.4%. Meanwhile, the average purchasing costs in Ulsan, Busan and Daegu were KRW 254,591, KRW 246,296 and KRW 245,395, respectively.

(4) Comparison of purchasing costs of four-member families by region with previous year

In a comparison of the purchasing costs for four-member families by region with those of the previous year, Chungbuk posted the highest price rises with an average of 18.1%, followed by Busan (15.2%), Gangwon (14.5%), Ulsan (12.0%), Jeonbuk (11.6%) and Jeju (9.8%).