2025 Inflation Near Target After Multi‑Year Decline South Korea’s consumer‑price index rose 2.1 % year‑on‑year in 2025, the slowest annual increase since 2020 and essentially on the Bank of Korea’s 2 % goal [1][2][3]. The figure follows a peak of 5.1 % in 2022 and a gradual easing through 2023‑2024, confirming a sustained cooling trend after the post‑pandemic surge. Core inflation, which strips out food and energy, remained at 2.3 % in December, indicating underlying price pressures persist despite the overall slowdown. The central bank expects inflation to converge toward about 2 % as global oil prices fall and core pressures stay near target [1].

December Prices Accelerate to 2.3 % Amid Weak Won In December 2025, CPI climbed 2.3 % from a year earlier, marking the fourth consecutive month above the 2 % target [1][2][3]. The uptick stemmed largely from higher import costs as the won weakened to near a 16‑year low around 1,480 per dollar, amplifying energy and commodity price transmission. Although agricultural, livestock and fishery prices eased relative to earlier months, they still contributed 0.32 percentage points to the overall rise [2][3]. The Bank of Korea signaled continued vigilance on exchange‑rate dynamics and seasonal factors to contain further inflationary spikes [1].

Energy and Food Prices Push Core Inflation Sticky Petroleum products lifted overall inflation, with year‑on‑year gains of 2.4 % in 2025 and a 6.1 % surge in December—the strongest since February [2][3]. Diesel prices jumped 10.8 % and gasoline 5.7 % in December, reflecting the won‑driven cost of energy imports. Agricultural, livestock and fishery items rose 4.1 % YoY, adding another 0.32 percentage point to headline inflation [2][3]. Despite these sectoral pressures, core CPI stayed at 2.3 % in December, underscoring that price stickiness remains anchored in non‑food, non‑energy components.

Consumer Sentiment Slips as Price Pressures Mount The Bank of Korea’s consumer‑sentiment index fell to 109.9 in December, a 2.5‑point decline and the sharpest drop since December 2024 [4]. Officials linked the dip to widening price increases in everyday necessities—particularly agricultural, fisheries and petroleum goods—and to heightened exchange‑rate volatility and uncertainty surrounding the AI industry. Inflation had risen to 2.4 % in October‑November, and a further weakening won could exacerbate household cost concerns. The sentiment slide highlights growing public unease despite the overall moderation in headline inflation.