Merchants resist price controls

Kang Mi Jin  |  2017-03-20 19:01
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In the midst of North Koreas lean period in March, the prices of some market goods in Ryanggang Province are fluctuating wildly, causing difficulties for ordinary North Koreans. In contrast, rice prices are exhibiting resistance to such changes. This trend is being seen as an indicator that the regimes ability to influence market prices is in decline, and market forces are taking the lead.     

At the beginning of last month, one kg of pork was selling for 20,000 KPW in Hyesan Market. Now it costs 13,000 KPW, a Ryanggang Province-based source reported in a telephone call with Daily NK on March 17. Potatoes, which were selling for 800 KPW per kg, rose to 2,000 KPW before falling back down to 600 KPW. 

The price of frozen pollack has been extremely irregular, he added, noting, It isnt unusual to see it on sale for 10,000 KPW per kg at first, before climbing to 11,000 KPW and then falling to the original price over the course of a day or so. The price fluctuations complicate matters for consumers.   

Food prices in the past closely mirrored the ups and downs of rice prices in North Korea. For example, if rice prices climbed by 1,000 KPW per kg, then corn prices could also be expected to rise by approximately 500 KPW. But that trend is beginning to change. 

In addition, North Korean rice prices used to exhibit sensitivity to currency exchange rates, but rice prices have recently been falling and climbing independently of the exchange rates.  

To calm volatility, the authorities have entered the markets and attempted to control prices, but merchants have widely rejected these measures. Merchants who sell similar products have been collaborating with one another to set prices or decide when to withhold products from sale. 

Merchants know that the authorities attempts to crackdown on the marketplace usually fizzle out over time, said a separate source in Ryanggang Province. The vendors will pretend to agree and listen to the authorities, but then they will secretly raise the prices.

As rumors spread that large shipments of pork were being smuggled in, shrewd merchants refrained from putting pork up for sale because they were expecting the price to rise. They then sold large quantities at a higher price, before the prices gradually began to fall again, she continued. 

One expert believes that this development signals how prices have moved out of the domain of the authorities and under the influence of the black market. 

The price volatility we are currently seeing in North Koreas markets is a common element for underdeveloped countries, said Professor Lim Eul Chul, from the Institute for Far Eastern Studies (IFES) at Kyungnam University. He went on to explain that pricing decisions by individual actors involved in market activity are becoming increasingly relevant, but the authorities are having trouble keeping up with the information.

In the past, market agents carefully watched the authorities reactions when setting prices, but the markets have developed and now it is the authorities who are following behind. Big merchants have the power and sway to move the market and control prices. We can expect this trend to continue, he concluded.

*Edited by Lee Farrand

 
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2017.06.28
Won Pyongyang Sinuiju Hyesan
Exchange Rate 8,070 8,050 8,095
Rice Price 5,800 6,000 5,900