Food Import Prices Surge on High Exchange Rate... Food Industry Considers Price Hikes

Import Price Index for Agri-Foods Up to 54% Higher Than 2020 in Q1
Won-Based Price Growth Outpaces Dollar Terms
High Exchange Rate Deepens Cost Burden for Imported Raw Materials
Agri-Food Trade Deficit Reaches $32.7 Billion
Food and Foodservice Sectors Move to Raise Prices

The persistent strong dollar, with the average won-dollar exchange rate fluctuating above the 1,500 won mark, is driving up import prices for agricultural, livestock, and fisheries products. Due to the high exchange rate, the import price index converted into won has risen more than 20% compared to that in dollars, increasing cost burdens not only for consumers but also for manufacturers.

Citizens are browsing products at the imported meat section of a large supermarket in Seoul. Photo by Yonhap News

According to the Bank of Korea's Economic Statistics System on July 16, the overall import price index for agricultural, forestry, and fishery products in the first quarter of this year, based on 2020=100, stood at 123.87 in US dollar terms and 153.93 in Korean won terms. The import price index is a statistic that shows price fluctuations of imported goods for each item. Over the past five years, while import prices in this category increased by about 24% in dollar terms, prices converted into won soared by about 54%, meaning the rate of increase was significantly larger in local currency.

More specifically, during the same period, import prices for beef rose by about 38% in dollar terms, but increased by 72% in won terms—a twofold difference. For imported pork, the index rose by about 3% in dollars but nearly 28% in won, while the import price index for chicken was 202.07 in won terms, more than doubling from just over five years ago.

Coffee saw the highest increase in import price during this period. The import price index for coffee reached 259.08 in dollar terms and 321.67 in won terms. Compared with 2020, the import price in dollars rose 2.5 times, while the won-converted price surged more than three times due to exchange rate effects. In addition, the import price indices for grains and feed crops, which are used as raw materials for fruit, fresh seafood, confectionery, bakery, and processed foods, were approximately 24% higher in won terms than in dollars.

An industry insider from the food sector commented, "While K-food has grown popular in global markets and export performance for related products has improved, the best-selling items overseas are limited to products such as instant noodles and processed foods, and even for these items, most raw materials are imported. In a structure where expensive imported ingredients are used to manufacture finished products that are then shipped out again, there are significant limitations to achieving high profitability due to rising exchange rates."

In fact, South Korea's instant noodle exports reached USD 1.521 billion (about KRW 2.2 trillion) last year, up 21.9% year-on-year, surpassing the USD 1.5 billion mark for the first time. Over the same period, exports in the combined "K-Food Plus" sector—which includes agri-foods and agricultural industries—hit an all-time high of USD 13.6 billion. However, the trade balance for the agriculture, forestry, livestock, and food sectors recorded a deficit of USD 32.676 billion, as imports in this sector exceeded exports by more than four times.

Foodservice companies such as burger and coffee franchises have raised the prices of some menu items in the first half of this year, citing mounting cost pressures. Beverage manufacturers, which had refrained from price hikes due to the government’s price stabilization policy, now appear unable to withstand escalating raw material costs. Last month, Lotte Chilsung Beverage raised the factory price of 44 products across 12 brands—including coffee, carbonated drinks, and ion drinks—by an average of 5.3%. From July 16, Ottogi will increase the factory price of 29 products across four categories, including curry, glass noodles, ketchup, and pepper. The average price increases by category are 17.0% for pepper, 10.0% for glass noodles, and 6.1% for both curry and ketchup. An Ottogi representative explained that, "Factory price hikes are inevitable, given that packaging material costs have risen due to fluctuations in international oil and naphtha prices, and import costs for key raw materials have also surged amid the ongoing strong exchange rate, increasing overall manufacturing costs significantly."

This content was produced with the assistance of AI translation services.