The Bank of Korea is closely monitoring a series of price increases by consumer-facing companies. One company's price hike can spread to competitors, turning cost pressures from higher raw material and shipping expenses into broader price increases across multiple product categories. With volatility rising in global oil prices and the won-dollar exchange rate as well, analysts say the trend could affect inflation in the fourth quarter.
A Bank of Korea official said on the 27th that "we judge that price-hike moves in the industry have been growing recently." So far this year, more than 30 companies have announced price increases or disclosed specific plans in categories included in the consumer price index, including coffee, tires, apparel, convenience stores and dining out — approaching last year's preliminary annual total of 32. In the franchise coffee sector, The Venti raised prices on major beverages by 100 to 500 won in the first half of this year, followed by Mega MGC Coffee, which raised prices on three items by 200 won each in June, and Mammoth Coffee, which raised prices on iced Americano and other drinks by 200 won in August.
Price increases have also continued in the tire industry. Hankook Tire raised domestic replacement tire prices by up to 5% starting in September, and Nexen Tire decided to raise factory prices for passenger car tires by an average of 3% starting in October. Cost pressures from higher raw materials and ocean freight rates are being passed through to prices.
What the Bank of Korea is focusing on is not individual price hikes but how quickly one company's price adjustment spreads to competitors and other product categories. When one company raises prices citing higher costs, competitors may read it as a signal that they can adjust prices as well, potentially producing a chain of increases. A Bank of Korea official said that "price increases are being monitored mainly in apparel and food products," adding that "this appears to reflect heavier burdens from raw material costs such as naphtha and from transportation costs." Yang Junsok, a professor of economics at Catholic University of Korea, also said that "whether other companies' prices go up is a fairly important variable," adding that "when one company has no choice but to raise prices, that is when everyone raises them together."
The increases are already showing up in official inflation data. After Coca-Cola Beverage raised its shipment prices in August this year, the inflation rate for carbonated drinks nearly doubled, rising to 4.8% in August from 2.4% in July.
External cost conditions are another variable. The won-dollar exchange rate has been highly volatile, falling to the 1,340-won range in early September, then surging to the 1,380-won range in mid-month before easing back to the 1,350-won range. In global markets, forecasts of a stronger dollar are resurfacing amid rising U.S. Treasury yields and the possibility of further rate increases by the Federal Reserve. Morgan Stanley recently put its mid-2027 forecast for the dollar index at 104, revising its earlier view of dollar weakness.
Global oil prices have also swung sharply with developments in the Middle East. Dubai crude spiked to $128 a barrel on the 16th before retreating to around $100. In its August economic outlook, the Bank of Korea assumed second-half oil prices of $84 a barrel on a Brent basis, but assumed as much as $91 under a scenario of worsening conditions in the Middle East. In a pessimistic case in which Middle East tensions are prolonged, it estimated that Brent would rise to $95 in the second half, pushing consumer inflation 0.1 percentage point higher this year and 0.4 percentage points higher next year than in the baseline forecast.
With raw material and transportation costs compounded by volatility in oil prices and the exchange rate, pressure on companies to raise prices may persist. In particular, if one company's increase spreads to competitors, rising costs could move beyond individual items to inflation more broadly. The Bank of Korea is also watching whether repeated price increases stoke inflation expectations, which could amplify the second-round effects of the cost shock. A senior official at a state-funded research institute said that "second-round effects can emerge when inflation expectations are unstable," adding that it is necessary to watch whether price increases fuel those expectations.
