Skyrocketing Dollar Pushes Korean Food Costs Higher — Will Prices Follow?
Creatrip Team
3 months ago
South Korea’s won-dollar exchange rate has risen for six straight months, lifting import costs for food companies that rely heavily on overseas raw materials. Despite global commodity prices softening, higher exchange rates have increased won-based input costs for items like cocoa, dairy, palm and soybean oils, squeezing margins at firms such as Lotte Wellfood and Ottogi. Companies are cutting costs, shifting product mixes, and using strategic purchasing, but many say they’ve exhausted easy savings. If the won weakens further toward 1,500 per dollar, widespread price pressures could force consumer price increases. Firms are reluctant to raise retail prices now because of government inflation controls and public opinion, so industry players are “watching each other” — some predict coordinated price hikes after the June local elections. Export-oriented firms and those with overseas operations may benefit from a stronger dollar, while most domestic-focused companies face rising costs for packaging, logistics and energy as well. Policymakers are urged to consider measures like expanded tariff allocations to ease import-cost pressure and protect domestic demand.
