Image: Reuters Berita 24 English - When South Korean inflation reached a 14-year high, office worker Park Mi-favorite won's lunch buffe...
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| Image: Reuters |
Berita 24 English - When South Korean inflation reached a 14-year high, office worker Park Mi-favorite won's lunch buffet recently increased costs by more than 10% to 9,000 won ($7). Prior to that, she had never purchased her lunch from a convenience store.
After the price increase, the 62-year-old remarked, "I went to convenience stores instead since I thought the pricing were acceptable and the food also tasted nice." Therefore, I now visit there two to three times every week.
According to the United Nations' agriculture department, global food prices increased last month by 23 percent compared to the previous year. Energy and fertiliser prices have increased as a result of the war in Ukraine, which has also affected food supply from Russia and Ukraine.
Convenience stores are becoming more popular as salaried workers like Park look for ways to save money. These businesses sell inexpensive instant noodles, sandwiches, and "gimbap" (rice rolls) for under $5.
Sales of instant meals at the GS25 chain of South Korean convenience stores increased by more than 30% from January to May of last year.
Due to rising demand, GS25 has also introduced a new lunch subscription service for office workers that includes price breaks and in-office deliveries.
While competitors like CU and 7-Eleven have experienced comparable spikes in demand, lunchbox sales at Emart24 increased by 50% in locations with a high concentration of office buildings.
These improvements occurred while restaurant meal costs in South Korea increased 7.4% last month when compared to the same month the previous year, the quickest rate in 24 years.
According to official figures, the cost of popular foods like "galbitang" (beef stew with rice) and "nengmyun" (cold noodles) increased by 12.2 percent and 8.1 percent, respectively.
Convenience store meals are not immune to rising pricing, but their significantly lower average prices have helped them become more popular.
According to data from the Korea Consumer Agency, average nengmyun costs recently exceeded 10,000 won throughout the capital Seoul, but instant ramen noodles are still offered at convenience stores for slightly more than 1,000 won.
According to the Bank of Korea, a 1 percent increase in the price of imported agricultural products will result in a 0.36 percent increase in processed food costs in the next year and a 0.14 percent increase in restaurant pricing over the following three years.
Some restaurateurs warn that prices will likely increase more.
In fact, Lee Sang-jae, who owns a galbitang restaurant in Seoul's central area and has already increased prices twice this year, to 12,000 won from 10,000 won, claimed that he needed to hike the price even more.
Instead, I'm giving up some of my profit margin since I also need to account for how tight office workers' budgets are right now.
In a poll conducted by the human resources company Incruit last month, 1,004 office workers said that 96% of them now felt lunch rates to be oppressive. Nearly half of them were trying to find cheaper lunch options.
However, office workers in South Korea view lunchtime as sacred and frequently linger with friends and coworkers for longer than the authorised hour in crowded restaurants.
Ku Dong-hyun, 28, who was chowing down on gimbap and ramen noodles from a GS25 for his Friday lunch, remarked, "It is more cheaper than going to a restaurant, but the drawback is we cannot eat lunch together here.
Despite months of COVID-induced social distance limits, many small restaurants are still reaping the benefits of a rebound in nighttime dining. However, economists caution that continued pressure on consumer pricing will have an adverse effect on consumption.
According to Lee Seung-hoon, chief economist at Meritz Securities, "Real purchasing power is declining amid intense inflation pressures, but many don't want to cut down nighttime gatherings they just started, whereas on lunches they may."
As consumer prices continue to rise, private consumption will begin to suffer. When this happens, together with worsening export-related external conditions, concerns will be raised regarding the central bank's strong monetary tightening that is currently taking place.
($1 = 1,284.3200 won)
