Sajo and CJ CheilJedang have joined the wave of processed food price increases. Starting next month, Sajo will raise prices on products including canned tuna and sauces by up to 20%, while CJ CheilJedang will lift prices on 27 items including Hetbahn instant rice, dumplings and grilled fish by an average of 8%. As cost burdens from rising prices of raw and secondary materials, packaging and logistics persist, price increases are spreading across the food industry. Concerns are also emerging that food inflation could spread further if the high exchange rate trend continues in the second half of the year.
According to the food and retail industry on the 18th, Sajo decided to raise the shipping prices of major products including canned goods, sauces and edible oils starting on the 3rd of next month. Canned tuna, a flagship item, will rise 10%, while seafood cans such as saury and mackerel will rise 20%. Sauces including gochujang, doenjang and ssamjang, as well as edible oil products such as sesame oil and perilla oil, will each see shipping prices rise by 12%. Earlier, prices for fish cakes and crab sticks were reportedly raised by 6% to 7% starting on the 2nd of this month.
Sajo's position is that price adjustments were unavoidable as manufacturing cost burdens persisted, including the rise in the won-dollar exchange rate, imported raw material prices, labor costs and logistics costs. The company explained that manufacturing costs rose significantly as the won-dollar exchange rate remained at a high level, prices of imported raw materials and packaging increased, and labor and logistics cost burdens compounded.
CJ CheilJedang also announced on the 16th that it would raise prices on 27 items across eight categories including Hetbahn, dumplings and grilled fish by an average of 8%. Price increase rates by item include 12% for Hetbahn, 8.4% for grilled fish and 4.6% for dumplings. The increased prices will apply at large marts starting on the 30th of this month and at convenience stores starting on the 1st of next month. However, convenience store items frequently used by younger consumers such as students—including Hetbahn Cupbahn, dessert products, sauces, and refrigerated and frozen noodles—were excluded from the increase in consideration of consumer burden.
Companies are complaining of cost burdens. In fact, the Bank of Korea also diagnosed in its "July Economic Situation Assessment: Real Economy and Employment Conditions After the Middle East War," released on the 16th, that companies' cost burdens have expanded as crude oil and raw material prices rose due to the Middle East war. In particular, it analyzed that the oil refining and chemical industries saw production declines and sluggish exports, and that management burdens on companies grew as rising producer prices coincided with weakening economic sentiment.
The problem is the resulting rise in prices. Last month, consumer prices rose 3.2% from the same month last year, the highest increase since December 2023. Petroleum product prices surged 24.7%, and agricultural, livestock and fishery products also rose 3.2%. Living costs, composed of items consumers frequently purchase, also rose 3.4%, increasing the burden of perceived prices.
Recently, tensions surrounding the Strait of Hormuz have risen again as U.S. President Donald Trump has not ruled out the possibility of deploying ground troops against Iran. As the Strait of Hormuz is a key passage for global crude oil transport, there are concerns that an expansion of the conflict could lead to higher crude oil prices and maritime freight rates.
The high exchange rate is also a burden. The won-dollar exchange rate soared to 1,549.4 won intraday at the end of last month before stabilizing somewhat to the 1,480 won range recently, but volatility remains high depending on the Middle East situation, dollar strength and foreign fund flows. As the food industry imports a significant portion of its raw materials from overseas, the rise in the exchange rate directly affects manufacturing costs.
Since the local elections, price increase moves in the food and dining industries have been spreading rapidly. Companies that had delayed price adjustments in consideration of the government's price stabilization stance are now moving to raise prices as they can no longer bear the cost burden. Ottogi raised the shipping prices of 29 items including curry, glass noodles, ketchup and pepper starting on the 16th of this month. The average increase rates were 17% for pepper products, 10% for glass noodles, and 6.1% each for curry and ketchup. Lotte Chilsung Beverage also raised the shipping prices of 44 items across 12 brands including Chilsung Cider and Pepsi Cola by an average of 5.3% starting on the 26th of last month, while Harim raised prices of refrigerated processed foods such as hot bars and chicken breast by 100 to 300 won starting this month.
The dining industry is no exception. The Born Korea raised prices on some menu items across 11 brands including Yeokjeon Udon, Rolling Pasta and Saemaeul Sikdang by an average of 11% last month. Mega MGC Coffee, Ediya Coffee, The Venti, Coffee Bean and Lotteria have also recently adjusted prices one after another.
"Companies have been absorbing cost burdens on their own until now, but the situation is no longer sustainable," a food industry official said. "If exchange rates and international raw material prices do not stabilize, there is a possibility that the price increase trend will continue for the time being, centered on processed foods and the dining industry."
