In South Korea, fried chicken is the latest sign of inflation problems

That’s why he grabbed his camera and joined a large crowd of shoppers clamoring for cheap fried chicken one August morning at Homeplus, the hypermarket chain that had just cut 12% off their already discounted prices.

“There were already more than 50 people in line,” Park told CNN Business, adding that many had arrived early and had waited more than an hour. “We all ran together to the deli as soon as they opened. That’s when the fried chicken craze went crazy.”

Fried chicken has long been a favorite of South Korean consumers — and now it’s also underscoring the country’s inflation woes, as food prices in general have weighed on wallets recently.

The average cost of fried chicken in South Korea rose 11.4% in August compared to the same month last year, outpacing the price hikes of other popular food items such as kimchi Stew or roast beef, according to government data.

Consumers may feel even more uncomfortable, depending on how much restaurants or supermarkets pay for them: In some cases, retail chicken prices have risen more than 50% over the past two years, according to Jeong Woo Park, a South Korean economist at Nomura. .

People around the world have been dealing with similar struggles in recent months with global food prices soaring — and scenes like the chicken race at Homeplus are reminders of how families are coping with broader inflation, which has reached 5.7% in South Korea. They also highlight how the country depends on other nations for much of its food.

national food

Fried chicken is a huge cultural hotspot in South Korea, similar to British fish and chips, which also became more expensive this year. Many people see it as an indispensable snack at sporting events, and it is not uncommon for customers to have it several times a month.

Anyone visiting the country is bound to stumble upon local chicken and beer, or Shemaksubscriber. That’s because one in 20 restaurants is a chicken restaurant, according to the government.

South Korea is the world’s third largest market for fried chicken, surpassed only by the most populous United States and China, according to data from market research firm Euromonitor International.

Crispy chicken” can be called a national food in South Korea like kimchi, bulgogi, And the bibimbapClark Park, creator of the content, said, pointing to other essential items that locals cherish.

Like other cultural favorites, it’s also serious business: Korean chicken restaurants generated $7.9 billion in revenue in 2021, according to Euromonitor.

This kind of dedication created a dilemma for stores, which should care about their bottom line without alienating customers.

“All costs related to fried chicken are rising very quickly,” said Jeong Woo Park, an economist at Nomura, adding that sellers are being hit by rising costs of oil, rent, labor, delivery services and even chicken feed. In response, he added, some restaurants have started using robots to cut labor costs.

fried chicken war

Sellers have taken vastly different approaches to the situation in recent months. Leading chicken chains raised menu prices by an average of KRW 2,000 ($1.50), according to Yunjin Park, senior food and nutrition research analyst at Euromonitor, citing “rising ingredient prices.” This led to a jump of roughly 10% to 15% in the price of fried chicken, she added.

While the difference may seem small, it could easily mean that customers would have to pay nearly $22 for a simple meal, Yongin Park told CNN Business: “Chicken, which used to be a comfort food for Koreans, is now no longer easy.” Ranking List [item] of course.”

By contrast, local supermarkets are going the other way. It was the August sale which Clark Park attended at Homeplus What is the chain called? “boil Chicken,” promoting fried chicken for a third of the price most retailers offer.

Other stores feel pressure to follow suit, albeit only for short periods. In August, emart, another major supermarket chain, launched a week-long promotion selling fried chicken at nearly 50% off — and all 60,000 items sold out.

However, not everyone can afford to cut prices, and some small outlets may have to close until their costs drop again.

A Homeplus worker offers buckets of fried chicken for sale.  Hypermarkets have created pressure for other stores to follow suit in terms of popular discounts.

“If you look at how these chain companies can sell at such low prices, it is mainly because of economies of scale,” said Parsali Bhattacharya, director of industry briefing at the Economic Information Unit (EIU).

“They are able to buy more products and therefore demand a better price from their suppliers. Now, your mom-and-pop convenience stores will not be able to enjoy this advantage, which means they are looking to drive their costs much higher.”

global crisis

According to EIU, one of the reasons South Korea faces such problems is that it imports nearly half of its food.

Nomura economists warned in a June report that it is one of the Asian economies most exposed to price hikes worldwide, as it relies on other countries for many types of food. Singapore, Hong Kong and the Philippines are also seen as at risk.

Global food prices have soared this year, in large part due to the Russian invasion of Ukraine. Both countries are major exporters of commodities such as wheat and sunflower oil.
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Perhaps the worst is already over: in August, the UN food price index fell for the fifth month in a row, and in Korea, overall inflation also fell more than expected.

But things are not expected to improve significantly any time soon. “We believe inflation is past its peak now, but is likely to remain above 5% for the rest of the year,” Min Joo Kang, ING’s chief economist for South Korea and Japan, wrote in a note to clients.

Other food prices are increasing elsewhere in Asia as well.

Last month, Thailand – where the government sets prices for some staples – raised prices for instant noodles for the first time in 14 years. A package from a popular brand there increased the equivalent of 3 to 20 cents, threatening to disproportionately harm low-income families.

“Food inflation is a thorny issue for Asia,” Bhattacharya said.

In most of the region, she said, income is in the low or middle range, and food typically makes up a large share of total consumer spending – in some cases, as high as 30%-40%.

“I think it was only a matter of time before the global food price crisis hit Asia,” she concluded.

-— CNN’s Gawon Bae in Seoul and Kocha Olarn in Bangkok contributed to this report.

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