South Korea's inflationary pressure eased to the lowest level in five years in 2025, following the sharpest price growth in decades during the post-pandemic period. Consumer prices, a key gauge of inflation, increased 2.1 percent on-year, slightly above the Bank of Korea's 2 percent target. The figure marks the lowest annual level since 0.5 percent in 2020.
Government data showed that South Korea's consumer prices rose 2.1 percent on-year in 2025, marking the lowest annual level in five years. This follows a surge from 2.5 percent in 2021 to 5.1 percent in 2022, before moderating to 3.6 percent in 2023 and 2.3 percent in 2024. Petroleum product prices increased 2.4 percent, returning to an upward trend for the first time in three years since a 22.2 percent jump in 2022.
"Overall, international oil prices have fallen compared with a year ago, but rising exchange rates and a reduction in fuel tax cuts appear to have pushed up gasoline and diesel prices," said Lee Doo-won, a ministry official. The Korean won has been among the world's weakest-performing currencies over the past year. Prices of livestock products rose 4.8 percent, while seafood prices increased 5.9 percent.
In December, consumer prices rose 2.3 percent from a year earlier, exceeding the central bank's target for the fourth consecutive month, largely due to rising import prices amid the weak won. Inflation stayed in the 2 percent range in June and July, eased to 1.7 percent in August, rebounded to 2.1 percent in September, and remained in the 2 percent range thereafter.
The ministry attributed December's inflation to a sharp 6.1 percent rise in petroleum products, the largest since February's 6.3 percent gain. Diesel prices surged 10.8 percent, the biggest increase since January 2023, while gasoline climbed 5.7 percent, the largest since February, reflecting the weak currency's impact. Agricultural, livestock, and fishery products rose 4.1 percent, contributing 0.32 percentage points to overall inflation. Imported beef prices increased 8 percent, the sharpest since last August, with mackerel, bananas, and kiwis also seeing significant gains.
"While exchange rates played a role, overseas supply and demand conditions also contributed," Lee said. Core inflation, excluding volatile food and energy, rose 2.3 percent in December.
