North Korea’s Prices Remain Steady Amid Sanctions as Kim Leaves Markets Untouched

By James Pearson and Ju-min Park

SEOUL (Reuters) – Food and fuel prices in North Korea have remained largely stable under the leadership of Kim Jong Un, despite increased international sanctions imposed in response to the country’s nuclear and ballistic missile tests. This observation comes from rare data sourced from within the isolated nation.

The relative stability of both prices and currency stands in contrast to the volatility experienced during Kim Jong Il’s reign. Experts attribute this to Kim Jong Un’s more lenient approach to a growing market-based economy, suggesting that some policy adaptations are taking place in Pyongyang.

Once dependent on a Soviet-style centralized economy, North Korea now has a burgeoning system of semi-legal markets known as “jangmadang,” where individuals and wholesalers can trade privately produced or imported goods.

Kang Mi-jin, a North Korean defector who works with the Seoul-based Daily NK and frequently communicates with market insiders, noted, “Since Kim Jong Un came to power, there has been no control or crackdown on the jangmadang.” She pointed out, “Kim Jong Un is doing many harmful things, but keeping the markets open has positively affected the people. He has no other choice. He can’t feed them, and he can’t completely shut down the markets.”

Data compiled from information provided by Daily NK indicated that prices for rice, corn, pork, petrol, and diesel have remained stable over the past year, showcasing resilience in the face of domestic and external challenges. This stability may ease concerns from critics who argue that sanctions intended to deprive Pyongyang of funding for its nuclear program could harm ordinary citizens, while simultaneously bolstering Kim Jong Un’s hold on power.

Verification of information from within North Korea is challenging; however, analysts have noted that instances of discontent or unrest have often been linked to economic issues, particularly previous unsuccessful crackdowns on private markets.

North Korea faced its latest round of United Nations Security Council sanctions in March after its fourth nuclear test and a long-range rocket launch, followed by additional missile tests that heightened tensions.

STABLE STAPLES

Daily NK gathers price information from contacts in the capital, Pyongyang, as well as in northern cities like Sinuiju and Hyesan, which share borders with China. An average of these prices shows that the cost of goods has not significantly increased, even as more North Koreans engage in the informal economy. Defectors report that the number of stalls in the jangmadang has risen considerably.

The country’s centrally planned rationing system has not fully recovered since a catastrophic famine in the 1990s. A recent World Food Programme report revealed that between April and June of this year, the state provided just 360 grams of rations per person per day—the lowest allocation in five years. However, the market has been able to fill the gap.

Rice, a vital staple, averaged 5,240 won per kg over the past year, equivalent to about 63 cents at unofficial market rates. In contrast, corn, a more accessible staple, was priced at an average of 2,022 won, or roughly 24 cents per kg. Pork prices experienced the most volatility, dropping sharply during the hot summer months.

“They can’t freeze pork. North Korea lacks refrigeration facilities. Pork spoils quickly, so merchants can’t raise prices,” Kang explained.

A notable price spike occurred in early March, just before the newest U.N. sanctions were enacted, leading to a 45.1 percent increase in petrol prices and a 17.4 percent rise in diesel. Prices normalized after fears of shortages subsided.

CURRENCY MYSTERY

North Korea’s official currency, the Korean People’s Won, is pegged by the state at about 100 won to the dollar, while its actual market value hovers around 8,300 won to the dollar. This unofficial exchange rate has remained stable in recent years, a stark contrast to the extreme fluctuations witnessed under Kim Jong Il following a failed currency reform in 2009.

Stephan Haggard, an expert on the North Korean economy at the University of California, San Diego, remarked, “The effective stabilization of the won in the past two years is somewhat of a mystery. It likely involves some learning in monetary policy following the currency conversion disaster.”

Under Kim Jong Un’s leadership, North Korea has increased the production of domestically made consumer goods, from toiletries to cosmetics, which may have contributed to local price stability. Some stores in Pyongyang exclusively sell locally produced items, pricing them according to the market value of the won.

“North Korean replicas of Chinese goods are becoming more popular and are cheaper than the originals,” noted Seo Jae-pyoung, a defector who left North Korea in 2001 but maintains contact with sources within the country.

Currently, everyday North Koreans are managing relatively well despite the nation’s deepening isolation. “Despite the sanctions this year, ordinary people are doing fine,” Seo observed. “However, the effects may gradually become apparent starting next year.”