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Effective Date |
: Jan. 18, 2011 |
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Dept. in Charge |
:Cost Analysis Team |
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Tel |
:+82-02-774-4060 |
Report on the results of a cost analysis of 15 items in 2010
< Group Members >
Consumers Korea, Korea Federation of Housewives Clubs, National Council of Homemakers' Classes, Korea Women's Association, Korea Consumer Affairs Institute, Korea Consumers Education Center, Consumers Union of Korea, YMCA Korea, National YWCA of Korea, Green Consumers Network in Korea
The Korea National Council of Consumer Organizations has reported the results of a cost analysis of the raw materials of 15 daily necessities.
The Korea National Council of Consumer Organizations (Chairperson: Kim Jae-ok) conducted a comparative analysis of the costs (raw materials), factory prices, and consumer prices of 15 daily necessities between January and December of 2010.
Producers should refrain from immediately reflecting a price increase of the raw materials of daily necessities on consumer prices.
Of 15 daily necessities, the average estimated price of raw materials of the following 8 items increased in 2010 compared to 2009: sugar, confectionaries, coffee, gochujang (red pepper paste), plastic wrap, milk powder, ice cream and cakes, and synthetic detergent. Of these items, the majority of manufacturers of five items (sugar, gochujang, plastic wrap, ice cream and cakes, synthetic detergent) immediately increased their prices due to the increase in the prices of raw materials. (See the attachment)
On the other hand, the average estimated prices of raw materials of the following 7 items decreased in 2010 compared to 2009: wheat flour, orange juice, kitchen foil, milk, ramen, cooking oil, and beer. Of these 7 items, the prices of 4 items (wheat flour, milk, ramen, and cooking oil) decreased a little, whereas the prices of 3 items (orange juice, kitchen foil, beer) went up a little. (See the attachment)
- Orange Juice: The price of undiluted orange concentrate decreased by an average of 22% in 2010 compared to 2009.
The factory price of orange juice during the period in question remained the same, but consumer prices went up by 5%.
- Kitchen foil: The price of raw materials decreased by an average of 10% in 2010 compared to 2009.
The factory price of kitchen foil during the period in question decreased by 15%, but consumer prices rose by 16%.
- Beer: The estimated average price of raw materials decreased by 10% in 2010 compared to 2009.
The factory prices and consumer prices of beer during the period in question increased by 1.9% and 2.6%, respectively.
As such, manufacturers immediately reflected the price increase of raw materials on consumer prices, but did not reflect the price decease of raw materials immediately. As a result, the consumer prices of daily necessities go up every year, making consumer prices unstable.
In particular, in the case of wheat flour, a price increase was expected in February 2011 due to the price increase of raw materials from November 2010, but manufacturers were considering a price increase even when they had not used raw materials subject to a price increase in their production process at that point. (See the attachment)
Regarding the unfair practices of manufacturers in the past, the Korea National Council of Consumer Organizations forcefully urged manufacturers to refrain from hiking up their prices, and, in particular, asked them to immediately lower the prices of their products if the prices of their raw materials decreased.
In addition, in the case of the price of sugar, which showed a price increase in late December 2010, the international price of raw sugar increased in the early half of 2010, and manufacturers reflected the increase on their factory price in the late half of 2010, resulting in increasing consumer prices. However, after June 2010, the international price of raw sugar decreased to the average price for 2009, so manufacturers should reflect the decrease on their factory price. There should be no additional consumer price increase in the early half of 2011.
Sugar is the major raw material for confectionary and ice cream products to name but a few, so a rise in the price of sugar will cause a rise in the price of the related products. Accordingly, if the prices of raw materials go down, manufacturers should reflect the decrease on their factory and consumer prices to control the increase of consumer prices.
The Korea National Council of Consumer Organizations will perform its monitoring function
The Korea National Council of Consumer Organizations will perform a continuous monitoring of the costs of raw materials, factory prices, and consumer prices of daily necessities in 2011, and investigate unfair price increases in order to contribute to stabilizing consumer prices.
