South Korea's Inflation Rate Reaches 2.1% in 2025, Surpassing Target

According to data released by the government on Wednesday, consumer prices in South Korea saw a 2.1 percent increase in 2025 compared to the previous year. This figure is marginally above the Bank of Korea's official inflation target of 2 percent, signaling a minor uptick in the country’s cost of living.

This annual inflation rate of 2.1 percent marks the lowest level observed since 2020, when consumer prices experienced only a 0.5 percent rise. In recent years, inflation in South Korea has exhibited significant variability, peaking at 5.1 percent in 2022 before declining to 3.6 percent in 2023 and 2.3 percent in 2024.

In December 2025 alone, consumer prices recorded a year-on-year increase of 2.3 percent. This marks the fourth consecutive month where inflation has gone beyond the central bank’s 2 percent threshold. The government pointed to rising import costs, driven by a weakening Korean won, as a primary factor behind this persistent inflation.

During the year, inflation mostly hovered around the 2 percent mark. It remained stable at about 2 percent in June and July, dipped to 1.7 percent in August, and then rose back to 2.1 percent in September, maintaining this level for the remainder of the year.

A significant contributor to the recent inflation uptick was the notable increase in petroleum product prices. In December, these prices surged by 6.1 percent compared to the same month the prior year, representing the highest year-on-year hike since February, which saw a 6.3 percent increase.

Alongside the general inflation rate, core inflation—which excludes the more unpredictable food and energy prices—also climbed by 2.3 percent in December. This indicates that the inflationary trend is not confined to fuel and food and is spreading to various sectors of the economy.

The figures underline persistent inflationary pressures within South Korea’s economy, even as the rates appear to have eased compared to the peaks observed in 2022. The Bank of Korea's policymakers are expected to closely monitor the evolving situation as they aim to balance controlling inflation while promoting economic growth.