S.Korea diners, customers brace for higher prices due to palm oil squeeze
At Kang Jung-a's fried chicken diner in Seoul, the kitchen staff is ready to fry up the tasty dish for customers. But due to last week's news of a cost-boosting ban on Indonesian cooking oil exports, she fears the day is not far when she will have no choice but to raise prices and risk losing customers.
An 18-litre (4.8 gallons) tin of edible oil in South Korea now costs about 50,000 won ($39.20), approximately double from a year earlier and could go higher.
"I have been struggling to survive, but now, labour costs and everything has gone up and if oil prices increase further, we won't have a choice but to raise prices," said Kang, whose cheap-and-cheerful diner, specialises in "chimaek", a combination fried chicken and beer.
Genesis BBQ, one of the country's biggest fried chicken chains, last week said it will raise the prices of most items on its menu for the first time in four years by 10% starting May 2 after similar moves by rivalling Kyochon F&B and BHC, potentially speeding up price hikes at smaller food chains.
According to customs agency data, South Korea imported a total of $2.2 billion worth of animal and vegetable fats and oils in 2021, of which about 30% were palm oil. A total of 56.1% of those came from Indonesia and 43.8% from Malaysia.
Customers are also worried about the financial impact of the popular meal.
"30,000 won ($23.60) per portion of fried chicken is too much for me. If it goes up to that level, it might be better to raise a rooster and press your oil at home to cook it me or something," office worker Lee Young-jun told Reuters while enjoying a picnic of fried chicken with colleagues in Seoul's Hangang Park.
The latest struggle highlights a growing problem for Asia's fourth-largest economy, where policymakers are wary of the current cost-push inflation turning into even higher inflationary expectations among consumers, as inflation is at a decade-high level.