Tariffs on Bananas Cut by 56.3 Billion Won, But Retail Prices Unchanged: Why?

[Anchor]

It is time for our Friendly Economy segment with reporter Han Jiyeon. Han, we are talking about tariffs today, on this Friday, October 23.

[Reporter]

Last year, the government slashed 56.3 billion won in tariffs on bananas.

While wholesale prices dropped by 34%, retail prices remained virtually unchanged.

For those of you who wondered why prices did not get cheaper despite the tariff cuts, there is a reason.

There is a system called quota tariffs.

It is a policy designed to stabilize inflation by lowering import tariffs up to a specified volume.

If the tariff is 30%, you have to pay 3,000 won when importing 10,000 won worth of goods, but if it is lowered to 5%, you only need to pay 500 won.

The tariff cuts applied to 10 food items whose prices could be tracked last year alone amounted to 1.586 trillion won.

When the Korea Institute of Public Finance examined whether this actually lowered grocery prices, price reduction effects were confirmed for only three items: pineapples, mangoes, and oranges.

The remaining seven showed no verified effect, and some even moved in the opposite direction.

Bananas received the largest tariff cuts of all.

They account for more than one-third of the total tariff cuts.

Wholesale prices plummeted from the 2,900 won range per kilogram in mid-the year before last to the 1,900 won range late last year, but retail prices showed little difference from the 3,333 won late last year and a peak of 3,407 won.

In other words, while things got cheaper at the wholesale stage, the effect vanished by the time the goods reached consumers' hands.

There were also cases where tariff benefits were intercepted.

In an investigation announced last month by the Korea Customs Service, a banana importer was caught inflating import prices and failing to reflect about 14% of the tariff cut portion in domestic wholesale prices.

[Anchor]

How are the trends for other items?

[Reporter]

Import prices for sugar fell by 24%, but consumer prices stayed the same.

In the case of instant noodles, product prices rose slightly even though raw material tariffs were cut.

For sugar, tariffs were lowered from 30% to 5%, saving 20.7 billion won.

Sugar prices late last year were 47% higher than in 2020.

Sugar showed a phenomenon where rising import prices were quickly reflected in consumer prices, while falling prices were reflected slowly.

It is exactly like the saying, "Rising like a rocket, falling like a feather."

Tariffs of 17.7 billion won were also cut on potatoes and starch, which are raw materials for instant noodles.

The explanation is that because instant noodles use multiple ingredients, the effect is limited even if the price of a single ingredient drops.

Frozen pork, on which tariffs were completely eliminated from 25% to 0%, showed little response in the prices of ham or bacon.

Some companies abused this system.

When the Korea Customs Service investigated 21 import companies, violations amounting to 546.8 billion won were found in 10 of them.

The evaded taxes alone reach 58.6 billion won.

Importers inflated import prices, used dummy companies that only lent their names to secure more low-tariff quotas, and stockpiled goods in bonded warehouses where goods are kept before paying taxes.

While beef is supposed to be taken out and released to the market within 45 days, it was left lingering for up to 137 days.

The Korea Customs Service plans to shorten the reporting deadline and double the penalty tax limit.

In the National Assembly, lawmakers pointed out that the government must track and disclose whether cut tariffs are actually reflected in consumer prices and re-examine items that show no effect.

[Anchor]

The last topic is about gimbap costing around 4,000 won per roll—it feels like it actually costs about that much these days.

[Reporter]

Last month, the average price of a roll of gimbap in Seoul stood at 3,923 won, leaving just 77 won until 4,000 won.

The cost of a single lunch meal must feel burdensome.

In Seoul, prices surged by 8.3% over the span of a year.

Looking at the nationwide average, gimbap saw the highest increase at 5.1% among eight major dining-out menu items.

Bibimbap in Seoul reached 12,000 won, and kimchi stew set meals nationwide surpassed 9,000 won.

Rice prices are also playing a part in the consecutive price hikes for menu items containing rice.

As of October 20, the average retail price for 20kg of rice was 62,903 won, which is more than 6,000 won—or 11%—higher than normal years.

Although it dropped slightly compared to this time last year, prices are continuing a high-flying march above 60,000 won.

The average price per package of instant rice also rose from 1,590 won in October of last year to 1,642 won last month.

Coupled with price burdens, an increase in single-person households, and shifting dietary habits, the amount of rice sold at places like supermarkets through August of this year reached 247,000 tons, down more than 7% from a year earlier.

Instead, smaller portions of instant rice were in higher demand.

The proportion of small instant rice packs weighing 130g or less quadrupled from 4% four years ago to 16% in the first half of this year.
※ Please note: This article was translated by AI and may contain errors.