Food and dining prices increase amid vacancy in the post of economy minister
Surging food prices at the time when the government lacks a fincance minister are worrisome. Dining and processed food prices have gone up significantly over the last few months, further dampening the already weak consumer sentiment. It is feared that the nation's economy could end up in a vicious circle of stagnation.
According to Statistics Korea on Friday, dining inflation hit a 13-month high of 3.2 percent year-over-year in April. The increase in prices of jajangmyeon (noodles in black bean sauce), kalguksu (knife-cut noodles), hamburgers, fried chicken and gimbap ranged from 5 to 8 percent. Franchise store coffee prices rose by 3 to 5 percent.
Processed food prices increased faster than food service prices. They rose by 4.1 percent. Chocolate prices jumped 21.2 percent, the highest level in nearly 16 years. Canned coffee prices rose 8.0 percent.
The restaurant industry production index fell 3.4 percent in the first quarter. It was the steepest decline since the fourth quarter of 2023. The food and beverage retail sales index also went down 0.3 percent. This marked the first time since 2006 that the two indicators — one reflecting dining out and the other retail food sales — decreased at the same time. This indicates the dire economic situation facing small business owners and those in the low-income bracket.
The prices of processed foods and daily necessities could keep rising in the weeks until the June 3 presidential election. How long the current business slump will last is anyone's guess.
It is unlikely that low-income people concerned about inflation and job security will readily open their wallets.
If ordinary working people, whose purchasing power has weakened, reduce their spending on dining out and groceries, the economic hardship facing small business owners will worsen and accelerate the economic downturn.
Considering the increase in the prices of imported materials and payroll costs, their difficult situation is understandable. But an excessive price increase could stymie an economic recovery by suppressing domestic demand. In light of economic crises at home and abroad, companies and small businesses should refrain from hiking prices.
According to the Bank of Korea, the real gross domestic product of Korea contracted 0.2 percent in the first quarter. This is a critical period in which to achieve a rebound from negative growth in the nation's economy. Unfortunately, the top post at the executive branch's economic command center in the executive branch is vacant.
On May 1, acting President and Prime Minister Han Duck-soo declared his presidential bid and stepped down. Shortly afterward, Choi Sang-mok also resigned as deputy prime minister and minister of economy and finance. Choi was supposed to take over from Han, but he quit as the opposition Democratic Party of Korea, with its majority in parliament, proceeded with a bill to impeach him. Lee Ju-ho, deputy prime minister for social affairs and education minister, has become acting president as the fourth person in the line of succession, and people are concerned about the government's ability to respond effectively to economic issues.
Due to the leadership void at the Ministry of Economy and Finance, government measures to combat inflation are feared to become haphazard for about a month until the presidential election. It is questionable whether the vice minister, as the ministry's top official, can effectively lead regular meetings of economic ministers.
Fortunately, a 13.8 trillion won ($9.97 billion) extra budget was passed through the National Assembly on Thursday and was approved at an extraordinary Cabinet meeting the following day.
Though its passage was belated, the execution of the supplementary budget should be rapid. Support for low-income groups and financially strapped small businesses should be prioritized.
Given the absence of an economy and finance minister, government officials need to establish a system quickly to facilitate cooperation among related ministries.
Stabilizing prices is an important role of the government. It should double its efforts to curb inflation in the weeks ahead of the presidential election.
