Input 2021.02.02 10:20
Cold waves, heavy snow, and avian influenza (AI) pandemic
Concerns about’aflation’ rising prices due to soaring agricultural product prices
Egg 15.2%, pork 18.0%, domestic beef 10.0%, chicken 7.5%, rice 12.3%…
As shopping cart prices have soared since the beginning of the year, the overall consumer inflation rate has been around 0% for four months, but the perceived price of consumers is on a high stride.
Food prices, which continued to rise last year due to the longest rainy season, do not know that they will be crushed by bad news such as winter heavy snow and avian influenza (AI) epidemic. There are also concerns that rising prices of agricultural products may lead to agflation, leading to an overall increase in inflation. Agflation is a compound word of agriculture and inflation.
According to the consumer price trend for January released by the National Statistical Office on the 2nd, the fresh food index last month rose 9.2% from the same month last year. The fresh food index is an index that reflects the prices of 50 items, such as fish, seafood, vegetables, and fruits, whose prices fluctuate according to weather conditions or seasons.
By item, commodities rose only 0.9% from the previous year, but the effect was strong due to the impact of the price decline of industrial products (-0.6%) such as petroleum products (-8.6%). Agricultural and fisheries products, which have a close influence on the perceived price, rose 10.0%, showing a high increase since last November (11.1%) and December (9.7%). Agricultural products rose 11.2%, livestock products 11.5%, and fisheries products rose 3.2%. Eggs (15.2%) and domestic beef (10.0%) rose, and livestock consumer prices rose the highest in six years since June 2014 (12.6%).
In particular, due to the avian influenza (AI), eggs rose 15.2% from a year ago, and the price rose the most since March 2020 (20.3%). Chicken also showed 7.5%, the largest increase since February 2019 (13.0%). As demand for house food increased due to social distancing, prices of pork (18.0%) and domestic beef (10.0%) also rose. Eggs and pork can affect the price of food materials, making service prices unstable.
Agricultural product prices rose 11.2% due to heavy snowfall and cold weather. Apples (45.5%), rice (12.3%), green onions (76.9%), red pepper powder (34.4%), onions (60.3%), etc. increased significantly, Chinese cabbage (-36.6%), radish (-35.3%), and tomato (-8.8%), green peppers (-13.5%), carrots (-21.8%), and lettuce (-7.7%) fell, while vegetable prices rose 3.0%.
An official from the National Statistical Office said, “The price of agricultural products, which continued to rise due to factors such as the rainy season and typhoon last year, continued to rise due to cold waves and heavy snow.” And chicken prices also increased significantly,” he explained.
In addition to agricultural and livestock products, cheonsei and monthly rent also contributed to inflation. The living price index including rent for cheonsei increased by 0.4% compared to the same month last year and 1.0% compared to the previous month. The self-housing cost inclusion index rose 0.7% from the same month last year and 0.6% from the previous month. The self-housing cost inclusion index was created by including the cost (self-residing cost) paid for services obtained by using one’s own home for residential purposes.
On the other hand, during this period, the consumer price increase rate in January recorded 0.6% compared to the same month of the previous year, maintaining the 0% level for 4 consecutive months. The source price (agricultural products and petroleum exclusion index), which shows the key trend of inflation, also rose 0.3% year-on-year and 0.9% year-on-month. As prices of electricity, water, gas, and industrial products have fallen due to low oil prices, it is difficult to realize the low prices as the prices of dining tables and rents, which directly affect the lives of the common people, rise.
Food prices rose 1.4% from the previous month and 3.8% from the same month last year, while the non-food prices rose by 1.0% from the previous month and 1.6% from the same month last year. The living price index rose 1.1% from the previous month and 0.3% from the previous year. The monthly living price index rose 1.0% MoM and 0.4% YoY, respectively.
Some are concerned that rising prices of agricultural and livestock products, such as grains, may cause aflation, which affects overall prices. In particular, as demand for agricultural and marine products increases ahead of the Lunar New Year this month, there is a high possibility that the price of the table will surge again.
The supply and demand of international agricultural products is in an unstable state due to the recent Corona 19 and climate change. Following the sluggish domestic rice production, international food prices, such as wheat and corn, also updated their highest levels since 2014. International grain futures prices also continue to rise. The rise in international food prices is expected to affect food prices and food prices by the second half of this year.
An official from a private economic research institute said, “Because there is a lot of liquidity around the world due to the overcoming of the corona, the price of raw materials such as crude oil may become unstable, and the international grain price may also increase further.” Such a factor can be a considerable anxiety factor for the common people’s perceived price.”