South Korea Inflation Hits 21-Month High

South Korea’s annual inflation rate slowed to 2.9% in September 2026 from 3.1% in August, in line with market expectations but remained above the central bank’s 2% target. The slowdown was largely driven by softer price growth for alcohol and tobacco (0.1% vs 0.4%), communication (2.0% vs 16.6%), and other goods and services (4.1% vs 4.4%). On the other hand, prices accelerated for household goods and services (3.0% vs 2.9%), transport (7.7% vs 7.2%), and recreation and culture (5.8% vs 4.9%). Costs also increased for food and non-alcoholic beverages (1.0% vs -0.5%), health (1.6% vs 1.4%), and education (1.6% vs 1.3%), while inflation remained unchanged for clothing and footwear (2.8%), housing, water, electricity and fuel (1.9%), and restaurants and hotels (2.8%). Meanwhile, core inflation, excluding food and energy, eased to 2.8% from 3.4% in August. On a monthly basis, consumer prices rose 0.3%, marking the fastest rise since May and accelerating from 0.2% in August.

South Korea’s annual inflation rate rose to 3.1% in August 2026 from 2.8% in July, moving further above the central bank’s 2% target but below market expectations of 3.2%. The increase was largely driven by a one-off factor of low-base effect from temporary mobile-service discounts last year, with mobile service fees surging 26.7% year-on-year and lifting public-service prices by 6.5%. Petroleum prices also remained elevated, rising 14.2%, although slower than the 15.5% increase in July. Excluding the temporary impact of mobile fees, inflation would have been around 2.5%, according to the Finance Ministry, while nationwide fuel-price caps reduced the headline rate by 0.3 percentage points. Meanwhile, core inflation, excluding food and energy, accelerated sharply to 3.4% from 2.6%, marking its fastest annual increase since May 2023. On a monthly basis, consumer prices rose by 0.2% in August, falling short of market estimates for a 0.3% gain but rebounding from a 0.2% decline in July.

South Korea’s annual inflation rate slowed to 2.8% in July 2026, marking the softest increase since April and down from 3.2% in the previous month, which was the fastest pace since December 2023. The latest reading was below market expectations of 3.0%, though it remained above the central bank’s 2% target. Transport inflation eased (7.7% vs 11.1% in June), as the impact of rises in diesel and gasoline prices started to fade. Food and non-alcoholic beverages inflation also moderated to a three-month low (0.9% vs 2.0%), as did alcoholic beverages and tobacco (0.2% vs 0.5%). By contrast, inflation accelerated for housing and utilities (1.8% vs 1.7%), clothing and footwear (2.8% vs 2.6%), recreation and culture (5.5% vs 5.4%), and restaurants and hotels (2.8% vs 2.7%). On a monthly basis, consumer prices unexpectedly fell 0.2%, compared with market forecasts of a 0.1% rise, marking the first monthly decline since November 2025, due to lower transport, food, and housing prices.