Record rice prices stoke early-year food inflation

Rice ranks 55th among the 458 items surveyed in the country‘s consumer price index, giving it an outsized influence on inflation.

According to the Ministry of Data and Statistics and the Ministry of Agriculture, Food and Rural Affairs on Sunday, farm-gate rice prices during the October–December harvest period averaged 230,940 won ($160) per 80-kilogram bag, the highest level on record. The figure jumped 25 percent from a year earlier and stood 16.2 percent above the long-term average.

The government’s purchase price for Grade 1 public reserve rice, stockpiled for emergencies, also climbed to a record 80,160 won per 40 kilograms, up from 63,510 won last year. While higher purchase prices tend to lift retail prices, they also place a heavy burden on public finances. The government’s budget for public rice reserves reached 1.16 trillion won last year, an increase of 6 percent from 1.09 trillion won in 2024.

The agriculture ministry had repeatedly said that rice prices would stabilize during the harvest season after rising in the July–September “lean period,” when newly harvested rice is not yet available. As prices failed to ease even as harvest approached, the government released 55,000 tons of public reserves in August and September under a loan scheme. Companies that sold the government rice are required to return newly harvested rice by March this year.

Despite the partial release of reserves, prices have remained elevated. Data show year-on-year rice price increases of 15.9 percent in September, 21.3 percent in October, 18.6 percent in November and 18.2 percent in December, amplifying inflationary pressure. For the full year, rice prices rose 7.7 percent, the steepest increase since 2021 (9.4 percent). With 2020 prices set at 100, last year’s index reached 108.07, the second-highest level since statistics compilation began in 1975.

An agricultural expert said that soaring prices despite structural oversupply raise questions about policy-driven intervention. “The surge, even amid excess supply, inevitably fuels suspicion that the government is propping up prices,” the expert noted.

Criticism has also mounted that policy responses remain complacent despite rapid price gains. Official data show excess rice production of about 130,000 tons last year. Yet 550,000 tons—including 450,000 tons in public reserves and 100,000 tons set aside through market stabilization—were kept off the market. In 2024, excess production totaled 56,000 tons, but 650,000 tons were withheld via reserves and market separation. While aimed at preventing price collapses, critics argue that such measures may be fueling price spikes by committing trillion-won fiscal resources.

Concerns are likely to intensify when revisions to the Grain Management Act take effect in August, strengthening the government’s obligation to remove rice from the market—potentially sustaining price increases even amid oversupply.

Small neighborhood restaurants are also feeling the strain. With both wholesale and retail prices rising sharply, many eateries are considering raising rice portion prices. Others may opt to blend old and new rice to keep prices steady, at the cost of some decline in taste.