[Weekly Issue] From cooking oil to eggs… food price red light

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As grain prices rise, the prices of processed foods such as ramen and sweets are also expected to rise.[사진=뉴시스]

From cooking oil to eggs…
food price red light

Bad news came at a time when international grain prices soared due to Russia’s invasion of Ukraine. This is because Indonesia, the world’s number one palm oil exporter, has stopped exporting palm oil. On April 28, the Indonesian government decided to ban the export of palm oil, saying, “The supply and demand of edible oil for domestic consumption is destabilizing due to palm oil for export.”

The aftermath is not serious. A day after Indonesia stopped exporting palm oil, international soybean oil prices rose 4.5%. In Korea, where palm oil from Indonesia accounts for 56.4% of total imports, an emergency bell is also ringing at the price of a table.

Palm oil is widely used in processed foods such as ramen, confectionery, and bread, and if the supply disruption of Indonesian palm oil is prolonged, it is highly likely to lead to a contraction in processed food production and an increase in food prices.

Under this circumstance, even domestic egg prices are fluctuating under the influence of the unfinished Russia-Ukraine crisis. According to the Livestock Products Quality Assessment Service, the average consumer price for 30 special meals as of April 25 was 7008 won, up 10.1% from 6363 won in March.

Another problem is that the rising trend of international grain prices, which is used as a raw material for feed, is not slowing down. The Korea Rural Economic Research Institute predicted that the index for grain imports for feed increased by 5.8% (estimated) from a month ago in the first quarter of this year, and this index is expected to rise by 13.6% in the second quarter.

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According to the Korea Rural Economic Research Institute, if the unit price of grain imports rises by 10%, it is highly likely that consumer prices for processed food and restaurants will rise by 3.40% and 0.58%, respectively. The soaring grain price not only stimulates the price of home-cooked food, but it also leads to an increase in the price of raw materials handled by front-line restaurants, which can also raise the price of eating out. This is why there are growing concerns about agflation, in which an increase in agricultural product prices leads to an increase in inflation.

By Yoon Jeong-hee, The Scoop Correspondent
hearbring@thescoop.co.kr

Dunamu, which became a large company
Are you qualified?

Dunamu, which operates the cryptocurrency exchange ‘Upbit’, will become the first conglomerate in the industry. It is one of 76 companies selected by the Fair Trade Commission as a target group for disclosure on April 27.

Dunamu was the first cryptocurrency exchange to be designated as a conglomerate.[사진=뉴시스]
Dunamu was the first cryptocurrency exchange to be designated as a conglomerate.[사진=뉴시스]

Among them, companies with assets exceeding 10 trillion won are designated as companies with restrictions on mutual investment, and additional regulations such as ▲ ban on mutual investment and debt guarantees and ▲ restrictions on voting rights are applied. Dunamu’s total assets is 10.822.5 billion won (as of 2021), and it is designated as both a publicly disclosed corporate group and a company with restrictions on mutual investment, and related regulations are applied collectively.

However, there is a constant debate over whether the customer’s deposits held by virtual currency exchanges are regarded as corporate assets. The exchange has argued that deposits should be excluded from assets by applying the case of financial companies.

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On the other hand, the Fair Trade Commission decided to include the deposit as an asset, considering the cryptocurrency exchange as an ‘other information service business’ rather than a finance and insurance business. An official from the Fair Trade Commission said, “Upbit’s customer deposit is 5,812 trillion won, and even excluding this, its assets exceed 5 trillion won, so it was inevitable to designate Dunamu as a public enterprise group.”

The question is whether it is appropriate for a cryptocurrency exchange, where speculative potential exists, to rise to the ranks of large corporations. Although the revised Specific Financial Information Act, which begins with the disclosure of real-name bank accounts, is being applied to virtual currency exchanges, many view it as insufficient to quell the speculative craze. Will Dunamu be able to operate worthy of a large corporation?

By Lee Hyuk-ki, The Scoop Correspondent
lhk@thescoop.co.kr

interest rate hike
monthly rent snowball

As the base rate rises, the monthly rent burden is growing like a snowball. According to KB Real Estate on April 26, the KB monthly rent index for apartments in Seoul in April (January 2019 = 100) recorded 111.8, reaching an all-time high.[※참고: KB아파트 월세지수는 전용면적 95㎡ 이하 중형 아파트의 월세 추이를 조사해 산출한다.]

The cost of housing is getting bigger and bigger.[사진=뉴시스]
The cost of housing is getting bigger and bigger.[사진=뉴시스]

The problem is that the monthly rent is likely to get worse. According to the Seoul Real Estate Information Plaza, the monthly rental rate among apartment cheonsei transactions between January and April 2022 was 37.3% on average, up 1.6 percentage points from 35.7% in the same period in 2021.

The ratio of monthly rent for row houses and single-family houses did not differ. The monthly rent for row houses increased by 3.7 percentage points, from 31.5% (January to April 2021) → 35.2% (January to April 2022), and the proportion of monthly rent for single and multi-family houses increased by 6.8 percentage points from 56.3% to 63.1% during the same period. .

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The housing environment of young people living on a monthly basis is also a concern. As the monthly rent increases, the burden on young single-person households will inevitably increase as well. According to the Seoul Metropolitan Government, in 2021, the proportion of youth living with guarantees is 50.3%. If you include monthly rent without a deposit, it will increase to 53.0%.

Considering this, the government is pushing for a special support project for the monthly rent for young people, but many criticize that it is difficult to see it as a fundamental solution as the deadline is set to one year.

Correspondent Choi Ah-reum Thescoop
eggpuma@thescoop.co.kr

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