North Korea market prices show no signs of dipping after surge

[As Heard in North Korea]
Unification Media Group  |  2017-06-08 00:43

"As Heard in North Korea" articles contain radio programming content broadcast by Unification Media Group [UMG], an independent multimedia consortium targeting North Korean citizens.

Product prices have jumped recently in the markets of North Korea. This is not unusual during the month of May. However, unlike years past, there are still no signs of the prices returning to normal levels. Following the introduction of new international sanctions in early 2016, prices remained relatively stable, but fluctuations have recently started to emerge and the situation is making it harder for ordinary residents to get by. To learn more, we now turn to economic reporter Kang Mi Jin.

Lets start by looking at the most important product first: rice. Even until last week, rice was selling for about 4,500 KPW per kilogram [one U.S. dollar is approximately 8,040 KPW]. Since then, the price has crawled upwards, with some areas seeing an increase of 500 KPW. 

In North Hamgyong Provinces Chongjin City, for example, the price increased from 4,900 KPW to 5,400 KPW, while the price of corn rose 300 KPW to 2,000 KPW. Prices in Ryanggang Provinces Hyesan City were also on the rise, with pork increasing from 12,400 KPW to 15,000 KPW in one week. 

Can you tell us how residents are reacting to these developments?

May is known as the farming hardship period in North Korea. Its also known to residents as the season of tears, due to the difficulties in getting by. So a rice price increase during this time is particularly devastating. 

Of course, when the vegetable crops begin to emerge from the ground, some of the residents concerns are alleviated. However, after gasoline and diesel prices began to rise sharply last month, the prices of other products also began showing volatility. Now rumors are circulating among merchants that sanctions will get even tougher, and sellers are responding by price fixing. They do this by withholding products until the prices rise. 

Does this usually happen on a yearly basis? Or is this year different?  

According to price data tracked by Daily NK, grain and vegetable prices do tend to increase around this time of the year. However, this year, the price hikes have not been limited to grains alone, causing anxiety for the residents. 

The price per kilo for onion and garlic also increased by 1,100 KPW and 1,500 KPW over the past month in Chongjin City. Prices usually rise in May for the seeding period and in the fall for kimchi-making season, but the normal time frame for the price increase has come and gone, with no signs of a subsequent decrease in sight. In Hyesans Wuiyon Market, North Korean garlic is selling for 7,800 KPW per kilogram and Chinese garlic is going for 9,300 KPW. 

North Korean onion is selling for 6,750 KPW, a 600 KPW increase from last month, while Chinese onion is selling for 12,900 KPW, a 1,200 KPW increase. 

Can you tell us a bit about the prices for industrial products and how theyve been affected? 

Prices have jumped across the board. As an example, raincoats are now fetching 20,000-50,000 KPW more than they did last year. Womens raincoats cost 58,500 KPW last year, but now sell for 72,000 KPW.  Mens raincoats were 13,000 KPW, and now go for 17,000 KPW. Despite these significant jumps, analysts believe that prices will continue to climb even higher. 

Although these products tend to sell quite well in the summer, the price rises are too high to be explained merely by a spike in demand. Its almost as if the sellers are taking advantage of the trend. The merchants explain that the price increases are being caused by a more proactive application of sanctions by China. But it is also suspected that merchants are withholding their products because they predict that prices will continue to rise. 

The price increases must really be affecting the residents ability to purchase what they need to get by. Can you tell us a bit more about this? 

Until recently, residents were relative unfazed by the sanctions, because they were not dramatically affected by them. But now that prices are fluctuating, residents are concerned. Another factor that is affecting their ability to make a living is the fact that Kim Jong Uns reforestation order is reclaiming land that the residents were using for private farms. Some residents are openly saying, If we are forced to continue tightening our belts like this, who is going to be left? 

Sources indicate that there have even been defections due to the current state of affairs. One such incident involved a resident who lived on a farm in North Hwanghae Province. The individual was having a difficult time earning a living because food distribution was decreasing at the same time that mandatory payments to the regime (allegedly for construction projects in Samjiyon) were increasing. The difficult conditions caused the resident to flee. Sources indicate that there is a high possibility that defections will increase if living conditions deteriorate further.  

When the stricter sanctions were first introduced in 2016, we saw no dramatic changes in market prices for over a year. Why have things suddenly changed? And why are the residents responding more sensitively this time? 

North Koreans are used to hearing about sanctions against their country. Theyve been hearing it since the 1990s. But they have been able to use their own determination and hard work to overcome the difficult periods. This has made them more resilient to a certain extent, and can explain the relative price stability witnessed earlier. 

But the situation is different now. As rumors continue to spread that China is more actively enforcing sanctions, the residents are growing more and more concerned. They understand that market activity will suffer if access to Chinese-made products is reduced. This, in turn, will cause more problems for the residents. 

All prices are shown in KPW and current as of May 25, 2017.

*Edited by Lee Farrand

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Won Pyongyang Sinuiju Hyesan
Exchange Rate 8,000 8,070 8,105
Rice Price 4,690 4,870 5,000