[Anchor]

Joining us for our Friday segment on friendly economics is reporter Han Jiyeon. Han, I understand that food prices in Korea are notoriously high.

[Reporter]

Korea’s food prices are the second highest among OECD countries, trailing only Switzerland. We have remained at the top of the OECD rankings for three consecutive years.

The OECD uses a Purchasing Power Parity (PPP) index to compare price levels, which accounts for the different purchasing power in each country. Essentially, it compares how much you can buy with the same amount of money in different nations.

As of 2024, Korea’s index for food and non-alcoholic beverages stood at 146. If the OECD average is set at 100, this means prices in Korea are 46% higher. We rank second among 38 member countries, just slightly behind Switzerland at 147. This is significantly higher than in Japan, the United States, France, and Germany.

This has not been a one-time occurrence; we ranked second in 2022, first in 2023, surpassing Switzerland, and second again in 2024, maintaining a top-tier position for three years.

While prices for clothing, footwear, and education were also higher than the OECD average, other categories were significantly lower. Housing-related costs, such as rent and maintenance fees, were at 54.7, about half the average. Transportation was 75.3, leisure and culture 80.7, and food and lodging 93.6, meaning that outside of groceries, living costs are actually relatively affordable.

Consequently, Korea’s total household consumption price index ranked 23rd out of 38 countries, falling below the average. In short, we have a structure where only food is exceptionally expensive.

[Anchor]

What is the reason for this?

[Reporter]

The high cost of food can be attributed to the distribution structure. A prime example is the case of highway rest areas, where intermediaries have been taking double or triple commissions.

The Ministry of Land, Infrastructure and Transport announced a complete overhaul of how rest areas are operated. Previously, the Korea Expressway Corporation would contract with a rest area operator, which would then sign separate contracts with individual vendors in a multi-stage process.

Investigations revealed that operators were taking an average of 33%, and up to 51%, of the vendors' revenue as commissions, while the Korea Expressway Corporation collected 13.9% of the operators' revenue as rent. This layered structure made it inevitable for food prices at rest areas to be high.

Furthermore, there has been controversy over unfair practices involving Doseonghoe, an association of retired Korea Expressway Corporation employees, which participated in the rest area business through its subsidiaries. Under the new plan, the association will amend its articles of association to immediately sell off the six rest areas it currently operates. Moving forward, current employees of the Korea Expressway Corporation, those who retired within the last three years, and their families will be completely barred from participating in future bids.

[Anchor]

How exactly will things change?

[Reporter]

Starting next year, the system will shift to direct contracting. This could reduce rent by three-quarters, potentially lowering the price of an Americano at a rest area from 4,800 won to the 1,000-won range.

The Ministry of Land, Infrastructure and Transport plans to establish a new public management company. Instead of the Korea Expressway Corporation, this entity will contract directly with vendors. This will lower the rent paid by vendors from 33% of revenue to around 8–9%, a fourfold reduction.

This year, the new system will be piloted at eight rest areas that are either newly opened or have expiring contracts. The plan is to expand this to 100 locations next year, and to 80–90% of the approximately 200 rest areas nationwide by 2030.

With lower rent, convenience stores at rest areas, which typically close at 10 p.m., will be able to operate 24 hours a day and offer 1+1 discounts or telecom point redemptions, just like regular convenience stores. There are also plans to expand spaces where customers can prepare and eat simple meals like lunchboxes, gimbap, or cup noodles inside the stores.

Additionally, as it becomes easier for low-cost coffee brands to enter these locations, the price of an Americano at rest areas could drop below 2,000 won.

The bidding process will also be reformed. A new external evaluation committee will be introduced to select operators that guarantee quality and service while keeping prices affordable, and annual performance reviews will be conducted. This is expected to open doors for professional dining brands and local restaurants, not just franchises, to enter rest areas. In addition, dedicated spaces will be created to support young entrepreneurs in their initial business ventures.