🚨 Price Inflation and Household Burden: Rising Dining Costs and Consumer Response Strategies
Today Korean Economic News | 2025.05.05
📌 Pork Belly Now 20,000 Won Per Serving, Restaurant Prices Continue to Rise
💬 In Seoul, the average price of one serving of pork belly (200g) has exceeded 20,000 won for the first time. Restaurant price inflation was 3.2% in April, exceeding the overall consumer price inflation rate of 2.1%, showing a continuous upward trend. While the government is pursuing policies for price stabilization, household food budget burdens continue to increase. Experts analyze this as the combined result of high interest rates, rising raw material costs, and increased labor expenses.
1️⃣ Easy Understanding
Food prices outside the home keep rising, increasing the burden on households. Especially popular dishes like pork belly have risen significantly in price, leading to growing consumer dissatisfaction.
In Seoul, the average price of one serving of pork belly (200g) has exceeded 20,000 won. Just two years ago, it was around 15,000 won, but has increased by about 33%. This is more than three times the overall consumer price inflation rate of 2.1%. Not just pork belly, but common restaurant menu items like kimchi stew and soybean paste stew have also easily surpassed 10,000 won per serving.
There are several reasons why restaurant prices are rising. First, the cost of ingredients like pork, rice, and vegetables has increased significantly. U.S. protectionist policies and global supply chain disruptions have also raised imported food prices. Additionally, minimum wage increases have added to the labor cost burden. On top of this, fixed costs like rent and utility bills have risen since COVID-19, forcing business owners to raise prices.
These rising dining costs are increasingly burdening households. According to Statistics Korea, the average monthly household spending on dining out exceeds 400,000 won, accounting for more than half of total food expenses. Single-person households and dual-income families, who rely more heavily on eating out, are especially hard hit by price increases.
The government is strengthening living cost stabilization measures through supplementary budgets and monitoring restaurant prices, but these haven't provided fundamental solutions. Consumers are finding their own ways to cope, such as "home cooking" or seeking restaurants with better value for money.
High prices are difficult to solve in the short term. Government policy efforts, along with consumers adopting wise spending habits to manage expenses, are needed at this time.
2️⃣ Economic Terms
📕 Consumer Price Index
The Consumer Price Index measures price changes in goods and services purchased by average households.
- It is an index that shows price changes compared to a base year (currently 2020=100) and is announced monthly by Statistics Korea.
- It is expressed as a year-on-year increase rate, also called the consumer price inflation rate or inflation rate.
📕 Restaurant Prices
Restaurant prices are indicators that show price changes in the dining out sector within the Consumer Price Index.
- They measure price changes in food and beverages provided by restaurants, cafes, fast food outlets, etc.
- In recent years, they have shown higher growth rates than the overall consumer price inflation rate.
📕 Domestic Demand
Domestic demand includes all consumption and investment occurring within the country.
- It consists of household consumer spending, business equipment investment, construction investment, etc.
- It is an important indicator showing the basic strength of the domestic economy. Stronger domestic demand creates an economic structure more resistant to external shocks.
📕 Disposable Income
Disposable income is income that can actually be used for consumption or savings after taxes and social security contributions.
- It is the amount left after deducting essential expenses like taxes, pension payments, and social insurance premiums from total income.
- It is an indicator showing a household's actual purchasing power and standard of living. When prices rise, real disposable income decreases.
3️⃣ Principles and Economic Outlook
💡 Causes and Mechanisms of Price Increases
Let's examine why restaurant prices continue to rise and their impact.
First, raw material price increases and supply chain instability are major causes of inflation. Agricultural and livestock product prices have become unstable due to climate change and natural disasters. Pork prices in particular have risen by more than 25% over the past two years due to decreased domestic production and increased import costs. Also, U.S. protectionist policies have raised tariffs, significantly increasing the prices of imported food ingredients. Basic food ingredients like rice, flour, and cooking oil continue to rise in price, increasing cost burdens for restaurant operators. Added logistics cost increases are leading to overall cost increases.
Second, increases in labor costs and fixed costs like rent have a significant impact on restaurant prices. The minimum wage in 2025 is 11,000 won per hour, about 30% higher than five years ago. The restaurant industry is labor-intensive with high labor costs, so it is greatly affected by minimum wage increases. Rent in major commercial areas briefly decreased after COVID-19 but has returned to an upward trend. Added to this are increases in public utility charges like electricity and gas, significantly increasing fixed costs for self-employed business owners. Unable to bear all these cost increases, they ultimately pass them on to consumer prices.
Third, rising restaurant prices are creating changes in consumer behavior and new market trends. As dining out becomes more expensive, consumers are placing greater emphasis on value for money. Restaurants with declining sales are implementing measures like introducing kiosks and simplifying menus to reduce labor costs. Also, as dining out frequency decreases, there's a trend toward "value consumption" where people visit high-end restaurants for special occasions. Meanwhile, the market for meal kits and Home Meal Replacements (HMR) that can be easily prepared at home is growing significantly. Consumers are increasingly choosing "home cooking" or delivery food instead of dining out.
Rising restaurant prices are affecting not just prices themselves but overall consumer lifestyle patterns and food culture. This trend is expected to continue for the time being, requiring adaptation efforts from both consumers and business owners.
💡 Impact of Price Increases on Household Economics
Let's analyze the effects of high prices on household economics and response strategies.
First, price increases lead to reduced real purchasing power and declining living standards. When consumer prices rise, the quantity of goods and services that can be purchased with the same amount decreases. Since food and dining costs represent a large portion of household expenditures, price increases in these areas directly impact households. According to Statistics Korea, the average monthly household spending on dining out accounts for about 12% of total income, which is 2 percentage points higher than five years ago. The problem is that income growth rates are not keeping up with price increase rates, causing real disposable income to decrease. Low-income groups and fixed-income earners (such as pensioners) are especially affected by price increases.
Second, households are responding with changes in consumption patterns and spending adjustments. As dining out becomes more expensive, many households are adjusting their food spending structure. There's a trend toward finding restaurants with better value for money rather than expensive restaurants, or reducing eating out frequency and increasing the proportion of meals at home. Also, people are finding rational consumption methods like utilizing discount events at large marts or online malls, and buying ingredients in bulk for freezer storage. Meanwhile, among the MZ generation, there's a consumption pattern that emphasizes "psychological satisfaction for the price" (value beyond price). This means economizing on daily meals but spending without much concern for price on special occasions for high-satisfaction consumption.
Third, financial management has become important for wisely dealing with price increases. As food and living costs increase, the importance of household budget management is emphasized. Efforts are needed to create monthly spending plans and reduce unnecessary expenditures. Also, asset management to prepare for price increases through installment savings or diversified investments is important. Especially during inflation periods, investing in real assets or financial products that are strong against inflation may be more advantageous than holding cash. Meanwhile, practical methods for saving on food expenses such as planning ingredient purchases, reducing food waste, and bulk buying with divided cooking are gaining attention.
While price increases burden household economies, their impact can be mitigated through rational consumption habits and financial planning. Along with wisdom for saving on food expenses, it's important to seek ways to increase income and manage assets from a long-term perspective.
💡 Government Price Stabilization Policies and Outlook
Let's examine the government's price stabilization measures and future price outlook.
First, the government is pursuing various price stabilization measures. The government is addressing price stabilization and livelihood support through a supplementary budget of 12 trillion won. About 4 trillion won will be allocated to expanding energy vouchers for low-income groups, supporting agricultural and livestock product supply stability, and providing loans to small business owners. Also, monitoring of major necessities and restaurant prices has been strengthened, along with increased surveillance against unfair price increases. The Bank of Korea is maintaining the base interest rate at 3.25% for price stabilization but is also considering the possibility of lowering interest rates to stimulate the economy. However, a cautious approach is needed considering interest rate differences with the U.S. and exchange rate volatility.
Second, fundamental measures for price stabilization are expanding supply and structural improvements. Short-term price measures have limitations, requiring medium to long-term structural improvements. First, strengthening the production base for stable supply of agricultural and livestock products is important. Food supply stability should be enhanced through introducing advanced agricultural technology, expanding smart farms, and improving food self-sufficiency rates. Cost reduction through distribution structure improvement is also necessary. Distribution costs should be reduced and price stability promoted through activating direct transactions of agricultural products, building online distribution platforms, and expanding cold chain systems. For solving structural problems in the restaurant industry, policies such as rent stabilization, eliminating franchise bullying, and strengthening support for self-employed business owners are required.
Third, while the future price increase trend is expected to moderate, uncertainties remain. The Bank of Korea and major economic research institutes predict that price increase trends will somewhat slow down from the second half of 2025. Global supply chain stabilization, raw material price stability, and the possibility of interest rate cuts are expected to act as positive factors. However, uncertainty factors still exist such as strengthened U.S. protectionism, geopolitical risks in the Middle East region, and agricultural product supply instability due to climate change. Especially restaurant prices are likely to maintain higher increase rates than overall consumer prices due to continued increases in fixed costs like labor and rent.
Government price stabilization policies need to combine short-term responses with medium to long-term structural improvements to be effective. Especially in food and restaurant sectors, efficiency and stabilization throughout the entire process from production to distribution to consumption is necessary. Despite forecasts that price increase trends will moderate, consumers and businesses need to prepare for still uncertain economic environments.
4️⃣ In Conclusion
The continued rise in restaurant prices is burdening household economies, and especially the price increases in popular menu items like pork belly are raising perceived inflation. Raw material price increases, labor cost increases, and increases in rent and public utility charges are acting in combination, forcing self-employed business owners to inevitably raise prices.
These price increases reduce households' real purchasing power and directly affect living standards. Low-income groups and fixed-income earners are especially hard hit. Consumers are changing consumption patterns by reducing dining out frequency or finding value-for-money alternatives, while changes are occurring throughout the food industry with growth in meal kit and HMR markets.
The government is pursuing measures like livelihood support through supplementary budgets and strengthening price monitoring, but a medium to long-term approach including agricultural and livestock product supply stabilization, distribution structure improvement, and strengthened support for self-employed business owners is needed for fundamental solutions. Consumers also need to make efforts to minimize the impact of price increases through rational consumption habits and financial management.
While future price increase trends are expected to somewhat slow down, restaurant prices are likely to maintain high levels for the time being due to global uncertainties and structural factors. Especially fixed costs like minimum wages and rent will continue to act as upward pressure.
Ultimately, government, businesses, and consumers must work together for price stabilization. The government needs effective policy support and structural improvements, businesses need productivity improvements and rational pricing, and consumers need rational consumption and financial management to fulfill their respective roles. It's important to respond wisely to the economic challenge of price increases.