every 1 % depreciation translates into roughly 0.8 %-1 % higher cost for imported commodities priced in USD,Euro or CNY.

How the Weak Won is Driving Imported food Prices higher

1. Exchange‑Rate Dynamics Behind the Surge

• KRW depreciation timeline
1. Q1 2024: Won slid to 1,300 KRW/USD – a 7 % drop from the same period in 2023.
2. Q3 2025: Won weakened further to 1,380 KRW/USD, the lowest level since the 2008 financial crisis (Bank of Korea, 2025).

• Key drivers
• Higher US interest rates – Federal Reserve policy hikes increased the dollar’s attractiveness.
• Capital outflows – Korean investors sought higher yields abroad,pressuring the won.
• Trade‑balance strain – A widening deficit, especially in energy and raw‑material imports, reduced domestic forex reserves (Ministry of Trade, 2025).

• Impact on import pricing
• Every 1 % depreciation translates into roughly 0.8 %-1 % higher cost for imported commodities priced in USD, Euro or CNY.
• Food‑grade commodities (wheat, soybeans, dairy) are particularly sensitive as contracts are locked in hard‑currency terms.

2. Food‑Category Price Indexes – What the Numbers Show

Source: Statistics Korea Food Price Survey, 2025.

3. Supply‑Chain Pressures Amplifying Costs

• Shipping bottlenecks – Container shortages in the Pacific rerouted many routes, adding 2-4 % freight surcharges (Korea Maritime Association, 2025).
• Port congestion – Incheon and Busan ports reported average dwell times of 48 hours, up from 31 hours a year earlier.
• Domestic processing delays – Smaller grain‑processing firms face higher energy costs, wich are passed onto distributors.

4. Real‑World Effects on Korean Consumers

• Grocery basket inflation – The consumer price index (CPI) for food rose 9.2 % YoY in September 2025, the fastest pace in a decade.
• Lower‑income households – Food expenditure share climbed from 27 % to 31 % of total household spending (Korean Statistical Information Service, 2025).
• retail price adjustments – Major supermarket chains (E-Mart, Lotte mart, Homeplus) posted average price hikes of 4 %-7 % on imported staples.

5. Government & Industry Responses

5.1 Policy Measures

1. Temporary import‑tariff relief – A 0.5 % reduction on wheat and dairy imports for six months (Ministry of Agriculture, 2025).
2. Subsidized hedging program – The Korea Trade‑Investment Promotion Agency (KOTRA) offers limited‑risk FX contracts to mid‑size food importers.
3. Strategic reserve releases – The Ministry of Food and Rural Affairs released 200,000 tons of wheat from strategic stocks to stabilize market prices.

5.2 Private‑Sector Strategies

• Forward‑contract purchasing – Large retailers locked in 2024‑2025 contracts at pre‑depreciation rates, mitigating a portion of the cost rise.
• Local sourcing push – Companies increase procurement of domestic barley and rice to offset imported wheat dependence.
• Price‑adjustment automation – Retail POS systems now integrate real‑time FX rates,automatically updating shelf prices within seconds.

6. Practical Tips for Consumers

• Shop seasonally – Korean‑grown produce (e.g., korean cabbage, sweet potatoes) remains less vulnerable to FX swings.
• Bulk‑buy stable items – non‑perishable staples like rice and domestically produced noodles are less impacted.
• Use loyalty programs – Many major chains offer discount coupons tied to imported product purchases, offsetting price hikes.
• Consider option proteins – Plant‑based options derived from locally sourced soy or peas can be cheaper than imported meat.

7. Forecast Outlook (2026-2028)

• Projected KRW range – Analysts at Hana Finance predict a 1,350 - 1,450 KRW/USD corridor for 2026,assuming steady US rates and no major geopolitical shocks.
• Food‑price trajectory – If the won remains within this band, imported food inflation may settle around 4 %-5 % YoY, down from the 2025 peak but still above the Bank of Korea’s 2 % target.
• Risk factors –
1. Escalating US‑China tensions could disrupt supply chains for soybeans and corn.
2. Unexpected domestic political moves affecting fiscal stimulus may alter the won’s trajectory.

8. Key Takeaways

• The won’s depreciation directly inflates the cost of all hard‑currency‑priced food imports, with wheat, dairy, and meat feeling the most pressure.
• Supply‑chain constraints and higher freight costs compound the exchange‑rate effect, pushing retail food prices upward.
• Policy interventions (tariff relief, hedging support) and industry tactics (forward contracts, local sourcing) are mitigating but not eliminating the price surge.
• For Korean households,strategic shopping choices and leveraging retailer loyalty programs can soften the impact while the macro environment stabilizes.