High exchange rates expected to cause additional price increases, higher inflation

[Anchor]

As the prices of imported raw materials rise, the prices of major processed foods have been increasing one after another since the end of last year.

With the burden on shopping baskets already significant, the soaring exchange rates are leading to pessimistic forecasts about inflation.

Kim Jin-hwa reports.

[Report]

Consumer prices recorded a 2.3% increase last year.

The government evaluates this as a stable trend, but consumers feel differently.

[Kim Hyun-min/Seoul, Dongjak-gu: "I think prices went up a lot last year, so it doesn't feel as impactful to me."]

[Kim Ji-hoon/Seoul, Gangseo-gu: "I tend to buy less. I feel that prices have risen too much compared to before."]

When prices of frequently purchased items increase, consumers inevitably become sensitive to price fluctuations.

Last year, as the import prices of raw materials such as cacao, coffee beans, and flour rose, food manufacturers raised their prices one after the other.

As of last month, chocolate prices increased by 10.6% compared to a year ago, and coffee prices rose by 8.1%.

The increase rates for cooking oil (8%), biscuits (5.4%), and juice (8.3%) were also high.

Consumer prices, which had dropped to 1.3% in October last year, rose to 1.9% in December.

The problem lies ahead.

The exchange rate of the won to the dollar, which was in the 1,390 won range at the end of November last year, soared to the 1,470 won range within a month.

High exchange rates further stimulate import prices.

A representative from a food company stated that if the current high exchange rates persist, it could lead to additional price increases.

[Seo Ji-yong/Professor, Sangmyung University Business Administration: "In the food industry, most raw materials are imported from abroad, so the rise in exchange rates ultimately leads to an increase in prices."]

The government's expected inflation rate for this year is lower than last year at 1.8%.

However, due to the impact of high exchange rates, forecasts suggest that this month's inflation will exceed 2%.

KBS News, Kim Jin-hwa.