North Koreans say soaring rice prices ‘scarier than U.S. weapons’ as Kim Jong-un’s economic policy backfires

Rice prices in North Korea have hit record highs, nearly doubling in recent months. Leader Kim Jong-un has been tightening his grip over the market to assert state power, only to see it backfire.

Analysts say the regime’s “visible hand” — a metaphorical twist on Adam Smith’s famed “invisible hand,” referring to Kim’s decision to impose direct control over the grain market — is likely receiving a less favorable reaction from the public and may even be destabilizing the regime itself.

Japan-based North Korea-focused media outlet Asia Press reported Wednesday that the price of rice at jangmadang — North Korea’s informal markets — nearly doubled from the 4,000-5,000 North Korean won ($4.44 to $5.55) range per kilogram (per 2.2 pounds) in the spring of 2021 to the 8,800-9,500 won range from March to May this year.

The spike marks a major shift, as rice prices remained relatively stable even during the Covid-19 border shutdowns.

Price hikes result from increased demand or reduced supply in most economies. But North Korea has seen no sudden jump in demand for food.

While crop yields declined slightly last year due to floods and pest damage, overall production remained within typical ranges. South Korea’s Rural Development Administration estimated North Korea’s production of rice, corn and other staples at 4.78 million tons in 2024, down just 40,000 tons from the previous year.

Experts attribute the sharp rise in rice prices to the government’s expanded control over grain and consumer goods distribution.

North Korea revised several laws. including the Grain Management Act, Socialist Commercial Act and Pricing Act in 2022 to limit rice sales to state-run outlets and elevate prices to levels closer to those at jangmadang.

The changes appeared to signal an intent to curb unofficial market activity and consolidate state revenues. This shift has likely reduced the volume of rice circulating in the unofficial markets, thereby inflating prices.

A report titled “Changes in North Korea’s State Distribution Policy and Market Indicators,” released in December last year by Choi Ji-young, a researcher at the Korea Institute for National Unification, noted that the state’s grain outlets had begun charging 3,700 won per kilogram in Sinuiju as of December 2023 — nearly double the 2,000 won charged at traditional food supply centers and close to the market rate of 4,800 won.

The regime also reportedly hiked wages at state-run enterprises and institutions by 10 to 20 times starting late 2023.

While aimed at improving living standards, the move appears to have triggered inflation instead. Similar patterns occurred after North Korea’s July 1 Economic Management Improvement Measures in 2002, which included wage and exchange rate adjustments.

These interventions have likely dealt a blow to everyday North Koreans who rely on jangmadang to earn a living.

Rice in North Korea is more than a dietary staple, as it also serves as a liquid asset. Residents often say, “Rice prices are scarier than American strategic assets.”

Kim’s move to assert control over such a crucial commodity may be eroding public trust.

While corn and other substitutes — less affected by state controls — remain relatively stable, only rice prices have surged, underlining the policy’s unintended effects.

South Korea’s National Intelligence Service echoed this concern during a National Assembly briefing on April 30, stating that excessive local construction projects and ramped-up military production for Russian support have drained North Korea’s supply of raw materials and cash, exacerbating volatility in the currency and consumer prices.

“Rising rice prices could pose a serious threat to the livelihoods of ordinary citizens, especially those who lack privilege or access to state resources,” said Oh Kyung-seob, a senior researcher at the Korea Institute for National Unification. “From Kim Jong-un’s perspective, skyrocketing rice prices could be more destabilizing than the deployment of U.S. strategic assets to the Korean Peninsula.”

But some analysts suggest the current price level — around 9,000 won per kilogram — may stabilize rather than decline.

“This resembles the situation in 2002, when the July 1 reforms raised wages, exchange rates and state-controlled prices all at once,” said Kim Young-hee, a visiting researcher at Dongguk University’s Institute for North Korean Studies. “While market prices naturally rise after such adjustments, it’s unlikely to trigger an immediate crisis.”

BY CHUNG YEONG-GYO, LEE YU-JUNG  [paik.jihwan@joongang.co.kr]