The price of rice has hit 5,000 North Korean Won/kg in the market in Hyesan, Yangkang Province. This is the first time that the psychologically significant price point has been reached under ‘normal’ market operations in the region.
A source from the city told Daily NK today, “The price was just 4,500 won as recently as the 5th, but this morning it reached 5,000 won. The prices of all other items are also on the rise, and as corn and rice prices rise in the midst of an already difficult food situation, many households are buying less food.”
Rice prices in other regions are rising too, other sources have informed Daily NK. Rice was selling for 4,500 won in Musan, North Hamkyung Province on the 5th, and had already exceeded 5,000 won in Muncheon, Kangwon Province on that same day.
Rice prices in North Korea tend to reflect the upward (or downward) trend in the exchange rate of the day, indicating the strong causal relationship between them. So it is no surprise that whereas the Chinese Yuan exchange rate was 800 to 1 on July 5th, it had risen to 810-820 won/Yuan by July 9th, and today reached 860 won/Yuan (July 10th).
Increasing exchange rates and rice prices will inevitably exert upward pressure on all prices, aggravating inflation. Naturally, people are complaining, “How are we meant to survive when rice is so expensive?” the source commented.
Cho Bong Hyun, a researcher with the Industrial Bank of Korea Economic Research Institute, explained the root of the issue, saying, “Price and exchange rate rises are indications of North Korea’s unstable economic situation. Economic anxiety is spreading in North Korea because of the May-June farming hardship period and lack of state distribution at that time. Therefore, it is likely that inflation and exchange rates will continue to rise.”
“Inflation and exchange rate changes are caused by different things now than they were following Kim Jong Il’s death,” he went on. “Inflation and exchange rates fell before as a reflection of the positive atmosphere created by a combination of food aid from China and rations given in the name of the ‘Strong and Prosperous State’, but now there is little chance of that.. The disparities between Pyongyang and the regions will likely widen, so the hardships felt by those living in the regions will get worse.”