Increase in prices for soju and beer reported in South Korea
After several months of decline, the consumer price indexes for soju and beer served at restaurants and bars in South Korea have started to increase. This change is attributed to the end of temporary discount periods, the recovery of sluggish consumer spending, and a return to more normal market conditions.
For over 25 years, the index for beer served at restaurants followed a steady upward trend, from December 1999 to the increase in November 2024. Similarly, the index for soju served at restaurants had been increasing for over 19 years, from August 2005 to the recent increase in June 2022.
The earlier declines were partly due to sluggish consumer spending, prompting businesses to offer discounts. However, as consumer spending stabilizes, businesses are ending these discounts, causing prices to rise. The retail beer index surged 3.1 percent in June, the largest increase since October last year, and the consumer price index for beer served at restaurants also rose, climbing 0.5 percent in June.
Industry insiders believe that these temporary price reductions have reached their limits, leading to the recent increase in the consumer price indexes for soju and beer served at restaurants. The retail alcohol prices showed a similar pattern to the prices at restaurants and bars. For instance, the consumer price index for bottled soju, which had declined for 16 consecutive months, rose by 0.2 percent in May and 0.1 percent in June.
Despite these changes, the overall environment for liquor sales is being adjusted to support the domestic market. Changes in manufacturing and labeling regulations are being implemented to help local businesses compete in the market.
This rise in the index for beer served at restaurants marked a reversal after seven straight months of decline since December last year. The consumer price index for soju served at restaurants in South Korea rose 0.1 percent in June from a year earlier, marking the first increase in 10 months.
The long duration of these temporary price-cutting measures is unusual, according to an official from Statistics Korea. The latest uptick in the consumer price indexes for soju and beer at restaurants and bars signals the end of a rare period of prolonged price stagnation in South Korea's alcohol market.
The escalating prices in South Korea's food-and-drink sector could absorb the lifestyle of many consumers, as the consumer price index for bottled soju and beer served at restaurants have risen significantly, following the end of temporary discount periods in the industry. This surge in retail alcohol prices, parallel to the prices at restaurants and bars, suggests a broader financial impact on South Korea's economy, reflecting a return to more normal market conditions.
